Swedish CPIF-inflation excluding energy came in at 1.4 percent year-on-year in April, the lowest reading for over a year but consistent with the central bank’s view. Service inflation decelerated. Looking at the details, food prices rose and contributed 0.06 percentage point to the headline figure, while it was anticipated to have stayed the same. Foreign travel prices came in below the projection, contributing 0.09 percentage point to the CPIF. Books prices rose in the month, contributing 0.12 percentage point.
Travel prices are not likely to fall in May as was anticipated earlier, while the rise in food prices are unlikely to reverse in the months ahead, not least because of the SEK weakness. Therefore, on the margin, the composition of inflation shows slightly higher inflation than expected.
Looking at the inflation outlook, cost pressures continue to be modest on the back of modest pay-rises and low global inflation, noted Nordea Bank,
“Inflation will not be sufficient for a rate hike to be on the agenda, we think. In addition, we expect growth in domestic demand to slow. A rate hike is thus a long way off. We see the move from the Riksbank late 2019”, added Nordea Bank.
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