Swedish inflation and wage expectations remain largely stable

Swedish inflation expectations remained largely the same in the month of June and close to the 2 percent inflation target. Wage expectations also stayed the same, which probably is a concern for the Swedish central bank.

The Prospera’s quarterly survey showed that CPIF inflation expectations for five years remained mostly the same, coming at 1.98 percent. Long term CPIF expectations have been falling since the turn of the year.  The five years CPI expectations came in at 2.07 percent. Furthermore, money market players’ inflation expectations have steadied at 1.9 percent, thus slightly below the 2 percent target.

The one year and two years inflation expectations came in at 1.9 percent and 2 percent, respectively. Meanwhile, the slightly higher pay rises in Germany has not feed through to labor market parties in Sweden, implying that domestic inflationary pressure will continue to stay low, stated Nordea Bank in a research report. Overall, the Prospera survey indicates that challenges remain for the Riksbank, despite higher spot inflation.

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