May PPI Suggests Core Goods CPIF Disinflation Likely To Stall

Swedish PPI rose 2.6% Y/Y in May (vs 0.9% prior) and was unchanged M/M. There was no consensus for the print. The increase in the annual rate comes following a very soft May 2023, where PPI fell 1.7% M/M.

• The price index for domestic supply, which takes into account domestic PPI and import prices, also rose 2.6% Y/Y (vs 0.6% prior). Excluding energy, this index rose 3.6% Y/Y (vs 1.5% prior) and 2.1% on a 3m/3m basis (vs 1.0% prior).
• Details show that core goods pipeline pressures accelerated in May, with capital goods domestic supply prices up 4.5% Y/Y (vs 3.6% prior) and 1.4% 3m/3m (vs 1.1% prior) and consumer goods ex-food rising 2.2% Y/Y (vs 1.1% prior) and 1.6% 3m/3m (vs 0.3% prior).
• The SEK strengthened against the EUR, USD and NOK on an annual and monthly basis in May, which may have offset some of the rise in imported prices.
• The chart pack below suggests both core goods and good CPIF disinflation is likely to fade in the coming months, putting the onus on services to ensure CPIF ex-energy continues its return to the 2% target.
• Energy pipeline pressured fell in May, due to lower electricity and refined petroleum prices.
• Focus remains on the Riksbank meeting tomorrow though. Our preview is here.