Swedish December inflation comes in below Riksbank’s view, inflation to drift lower in H1 2018

Swedish inflation measured by CPIF came in slightly below the central bank’s projection in December. Sweden recorded CPIF-inflation of 1.9 percent, 0.1 percentage point below the Riksbank’s forecast. Excluding energy, CPIF-inflation slowed to 1.7 percent, also 0.1 percentage point below the central bank’s view of 1.8 percent. However, the figures were in line with consensus expectations.

Measured by consumer price index, inflation accelerated to 0.37 percent from 0.2 percent. Consensus expectations were for a rise to 0.4 percent. On a year-on-year basis, CPI decelerated to 1.7 percent from 1.9 percent, slightly below consensus and central bank’s view.

Food price inflation was surprisingly higher than projected, coming in 0.08 percentage point more than forecast. There are signs of lower food prices and are expected to fall in the first half of this year, noted Nordea Bank. Ticket prices for foreign travel were below projection and lifted the CPIF by 0.08 percentage point less than expected. Significantly, domestic inflation were on the low side, while services inflation fell noticeably.

“If are forecast proves right, it is not likely that the Riksbank will hike rates by mid-2018 as signalled by the bank. We see the first rate hike in October 2018, with risks tilted towards an even later first move”, added Nordea Bank.

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