Swedish inflation rises below Riksbank’s view in August

Swedish inflation data for the month of August was released today. CPIF inflation came in at 2.2 percent in the month, 0.1 percentage point below the Riksbank’s view. Excluding energy, CPIF came in at 1.2 percent, also 0.1 percentage point below the central bank’s forecast. Therefore, the trend with Riksbank overestimating core inflation continues. The outcome was consistent with Nordea Bank’s view.

“August marks the trough for CPIF excluding energy, and we expect core inflation to rise roughly in line with the Riksbank’s view the coming months”, noted Nordea Bank in a research report.

This is unlikely to be enough for a rate hike. One reason is that the uptick would mainly be a temporary rise in goods inflation. Another reason is that the Riksbank is expected to lower its inflation forecast for 2019 in the upcoming monetary policy reports.

Looking at the details, clothing prices and footwear prices came below projections, contributing just 0.24 percentage point to the headline figure. This was balanced by slightly higher prices for tele services and prices for foreign travel. Most other components were consistent with projections. Meanwhile, services inflation accelerated in August, and is expected to continue rising going forward but not enough for the Riksbank, stated Nordea Bank.