The Swedish inflation is likely to have come in at 2.2 percent year-on-year in November, according to a Nordea Bank research report. This is 0.2 percentage point below the central bank’s view. Half of the difference is lower energy prices and half is lower core-inflation.
The fall in oil prices in recent weeks implies that the central bank will have to scale down its CPIF forecast for the months ahead by around 0.3 percentage points. However, CPIF inflation will be above 2 percent in the near term and possibly high enough for Riksbank to hike rates during the next policy meeting in December, said Nordea Bank.
Oil prices have dropped and subtracted over 0.1 percentage point of the CPIF sequentially in November. Nevertheless, electricity prices moved in the other direction and have so far continued to be high in December. A further rise in prices for imported goods in November is seen as a lagging effect of the subdued SEK. Prices for foreign travel fell for seasonal reasons.
Food prices are increasing. Most indicators imply price hikes of about 3 percent to 4 percent year-on-year. Retailers’ prices expectations stand out, though, implying even higher price rises for food.
“As food prices are 14 percent of the CPIF basket, they constitute a risk for higher inflation and thus also a risk for the monetary policy outlook”, added Nordea Bank.