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Sweden: Downside surprise in inflation numbers - ING

Sweden’s headline CPIF measure printed 2.1% (vs 2.2% consensus expectation and 2.4% in the Riksbank’s October forecast) and the core measure excluding energy came at 1.4% (vs 1.7% in the Riksbank’s forecast), points out Jonas Goltermann, developed market economist at ING.

Key Quotes

“While lower headline inflation is not all that surprising given the fall in oil prices over the past two months, the anticipated drag from lower petrol prices was largely offset by higher electricity prices.”

“Instead, the lower inflation reading is down to weaker core inflation, which is more concerning from the central bank’s perspective as it suggests underlying price momentum is insufficient to keep inflation at the 2% target. That said, much of the weakness is down to the perennially volatile air travel and package holidays components, which are more noise than signal. The service price aggregate fell only slightly to 1.6%.”

“Today’s downside surprise reduces the probability that the Riksbank will raise interest rates at its policy meeting next week.”

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