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SWEDEN: Acceleration In Inflation In Line With Expectations

SWEDEN
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Swedish November CPIF ex-energy was in line with consensus at 2.4% Y/Y (vs 2.1% prior), with the monthly reading a tenth above expectations at -0.2% M/M. Headline CPIF was also in line on an annual basis at 1.9% Y/Y (vs 1.5% prior).

  • The Riksbank projected CPIF ex-energy at 2.0% Y/Y and CPIF at 0.9% in the September MPR.
  • However, this forecast error is unlikely to deter the central bank from easing policy rates again in December. The reason for the 1.0pp wedge between the headline CPIF projection and today’s outcome is a sharp increase in electricity prices, which had not been factored into the central bank’s forecasts.
  • Executive Board members have also been happy to look through energy-related volatility in the headline rate.
  • There are no details provided in the flash release. We will have a better understanding of underlying inflation pressures in next Thursday’s final release.
  • At the December monetary policy meeting, focus will be on how the Riksbank characterises the above-forecast CPIF ex-energy trajectory, and whether this will prompt a more cautious approach to rate cuts at the beginning of next year. 

 

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Swedish November CPIF ex-energy was in line with consensus at 2.4% Y/Y (vs 2.1% prior), with the monthly reading a tenth above expectations at -0.2% M/M. Headline CPIF was also in line on an annual basis at 1.9% Y/Y (vs 1.5% prior).

  • The Riksbank projected CPIF ex-energy at 2.0% Y/Y and CPIF at 0.9% in the September MPR.
  • However, this forecast error is unlikely to deter the central bank from easing policy rates again in December. The reason for the 1.0pp wedge between the headline CPIF projection and today’s outcome is a sharp increase in electricity prices, which had not been factored into the central bank’s forecasts.
  • Executive Board members have also been happy to look through energy-related volatility in the headline rate.
  • There are no details provided in the flash release. We will have a better understanding of underlying inflation pressures in next Thursday’s final release.
  • At the December monetary policy meeting, focus will be on how the Riksbank characterises the above-forecast CPIF ex-energy trajectory, and whether this will prompt a more cautious approach to rate cuts at the beginning of next year.