Swedish CPIF inflation came in line with Riksbank’s forecast in May but higher than consensus expectations. On a year-on-year basis, CPIF inflation accelerated to 2.06 percent, as compared to expectations of 1.9 percent. Excluding energy, CPIF came in at 1.7 percent year-on-year, as compared with consensus expectations of 1.6 percent.
Prices for hotel accommodations were the main surprise, positively contributing 0.12 percentage points to the CPIF on a sequential basis. The rise is possibly partly a seasonal upturn and should reverse in the months ahead. Food prices came in slightly below expectations, adding just 0.01 percentage point. Other components came in roughly in line with expectations.
Inflation measured by consumer price index eased to 0.3 sequentially from 0.7 percent recorded in the prior month. On a year-on-year basis, consumer price inflation accelerated marginally to 2.2 percent from 2.1 percent seen in the prior month.
“All in all, May inflation was higher than we had expected. The Riksbank will welcome that domestic related inflation rose. However, we see no reason to make any major changes to our inflation forecast and we expect headline inflation to decline to around 1 percent during the autumn. Any rate hike is a long way off. The May inflation reading is reducing the probability for more stimulus measures rather fuelling the arguments for a rate hike”, stated Nordea Bank.
