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February CPIF Preview - Base Effects Seen Driving Y/Y Disinflation

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Swedish CPIF is expected to moderate markedly in February, driven largely by base effects in core goods and food components.

  • CPIF ex-energy is expected to fall to 3.6% Y/Y (vs 4.4% prior). The Riksbank had forecasted 3.7% Y/Y in the November MPR, and the last 3 readings have all printed below the November forecasts.
  • February 2023 saw strong M/M price rises (Goods ex-food: 1.8% M/M, Food: 2.3% M/M), which analysts expect to moderate to more "normal" seasonal patterns (0.5 to 0.6% M/M).
  • Services inflation is expected to remain elevated in February, though analysts point to further disinflation in the months ahead, particularly when looking at recent survey evidence on business pricing plans.
  • Given the Riksbank's dovish pivot at the Jan/Feb monetary policy meeting, a lower-than-expected reading will increase calls for a rate cut as early as May amongst analysts.
  • However, even in this scenario, we still wouldn't expect the Riksbank to pre-commit to a rate cut at its March meeting, given the negative ramifications this would have on the SEK.
  • For a selection of analyst comments, see below:

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Swedish CPIF is expected to moderate markedly in February, driven largely by base effects in core goods and food components.

  • CPIF ex-energy is expected to fall to 3.6% Y/Y (vs 4.4% prior). The Riksbank had forecasted 3.7% Y/Y in the November MPR, and the last 3 readings have all printed below the November forecasts.
  • February 2023 saw strong M/M price rises (Goods ex-food: 1.8% M/M, Food: 2.3% M/M), which analysts expect to moderate to more "normal" seasonal patterns (0.5 to 0.6% M/M).
  • Services inflation is expected to remain elevated in February, though analysts point to further disinflation in the months ahead, particularly when looking at recent survey evidence on business pricing plans.
  • Given the Riksbank's dovish pivot at the Jan/Feb monetary policy meeting, a lower-than-expected reading will increase calls for a rate cut as early as May amongst analysts.
  • However, even in this scenario, we still wouldn't expect the Riksbank to pre-commit to a rate cut at its March meeting, given the negative ramifications this would have on the SEK.
  • For a selection of analyst comments, see below: