Swedish consumer prices came in line with projections in June. CPIF came in at 1.7 percent year-on-year, 0.1 percentage points higher than the Riksbank’s forecast. Energy prices fell a bit more than expected as electricity prices fell more than forecast. Fuel prices, along with lower prices for district heating, subtracted 0.19 percentage points from CPI sequentially as expected.
There were some surprises as well. The foreign flight component was not as solid as expected, but it still added 0.40 percentage points to CPI.
Meanwhile, domestic service inflation came in slightly higher than expected, positively contributing 0.1 percentage point more than expected. Although the figures released today seem to be slightly on the high side if one looks at the composition. According to Nordea Bank, domestic inflation is expected to hover around 2 percent.
For the coming months, Riksbank is expected to be too optimistic on growth and inflation and anticipate inflation to land below their forecast, for both headline and core measures.
“We expect CPIF to head to 1.0 percent by September. This is one of the reasons why we do not believe the Riksbank will see a rate hike this year or next year, and even see a possibility of easing measures being announced at some point later this year”, added Nordea Bank.