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Fast Comment SwedenInflation in April: The last scare before focus shifts back to upward trend

  1. Outcome fully in line with expectations
  2. Further signs of firm underlying inflation
  3. We stick to our forecast of a rate hike in December from the Riksbank
Outcome fully in line with expectations
The April data show CPIF inflation at 1.9 percent, thereby staying close to the Riksbank's target. The outcome was in line with the most recent Riksbank forecast, as well as our estimate and the consensus median (see graphs and tables below). Still, the krona strengthened on this news, perhaps as fears of further disappointments were alleviated. A previous survey showed that one or two analysts were more pessimistic about the outcome for CPIF excluding energy.
Further signs of firm underlying inflation
Both indicators and quantitative analysis of the detailed CPI data signal that underlying inflation is healthy and on the rise. On top of this, the weakening of the krona will contribute to higher inflation.
We stick to our forecast of a rate hike in December from the Riksbank
In our view, today's April reading, with CPIF excluding energy rising by 1.4 percent y-o-y, was the last real scare before worries about underlying inflation start to abate and focus shifts back to the multi-year upward trend in inflation. May CPI will provide one step in this impending rediscovery of inflation optimism. The continued gradual rise in underlying inflation that we forecast is the foundation of our expectation of a policy rate increase at the Riksbank's December meeting.


 



 



 




 



 



 




 





Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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