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Fast Comment SwedenRobust July inflation a small comfort for the Riksbank

  1. Headline inflation eases, but stays above the Riksbank's forecast amid still-strong underlying inflation
  2. But the tide is turning, as the cooling economy erodes the 2020 inflation outlook
  3. Hence, we stick to our call that the Riksbank will be forced to cancel its rate-rise plan

July inflation stayed above the Riksbank's forecast, but for next year we foresee weaker developments than the Riksbank does. 

Headline CPIF inflation less than 0.1 p.p. below our forecast, and hence turned out higher than consensus. However, market reaction in the krona was still limited. 

Inflation appears broad-based, even if energy prices have stopped lifting CPIF. Compared with our forecast, core services appeared on the low side, but we still expect underlying inflation to remain strong in the near term.

However, the weakening economy looks set to erode underlying inflation (here illustrated by CPIF excl energy) during 2020, something that we think will force the Riksbank to cancel currently planned rate rises. In other words, we stick to our forecast that the Riksbank stays on hold at -0.25 percent through at least 2021.


Johan Löf

Senior Economist


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