Swedish June inflation above Riksbank’s view, additional stimuli measures less likely

Swedish inflation, gauged by CPIF, came in at 1.9 percent year-on-year in June. This is more than consensus and Riksbank’s projection of 1.7 percent. Stripping energy, CPIF inflation came in at 1.9 percent year-on-year, 0.2 percentage points higher than the central bank’s view.

Surprises on the upside were again foreign travelling prices that contributed 0.14 percentage point more on the month than was expected. This is partially temporary. Foreign travel continues to be a wild card and is expected to continue to be so for most of this year, noted Nordea Bank in a research report. Furthermore, prices for bank services contributed another 0.1 percent.

Inflation gauged by CPI came in at 1.7 percent year-on-year, slightly higher than Riksbank’s 1.6 percent. On a month-on-month basis, the consumer price inflation remained at 0.1 percent, as compared with consensus expectations of 0 percent.

Energy prices dropped and subtracted 0.14 percentage point from the CPI sequentially. Summer sales on clothing and footwear negatively contributed another 0.3 percentage point, which is normal for the season, stated Nordea Bank.

Overall, inflation continues to be above the Riksbank’s view. Indeed, this is welcomed by the central bank and makes additional stimuli measures less likely. But any turnaround in the central bank’s monetary policy stance is still a long way off, particularly as the inflation-impulse from the Swedish krona will fade later in 2017, added Nordea Bank.

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