More Disinflation Than Expected

Sweden CPIF inflation for August was +4.7% Y/Y and -0.1% M/M (vs 6.4% Y/Y and -0.2% M/M prior). Consensus was for a +4.9% Y/Y rise, while the Riksbank expected +4.8% in its June MPR.

• CPIF ex-energy was 7.2% Y/Y (versus consensus of 7.4% and the Riksbank at 6.9%).
• As expected, downward pressure was applied from food, electricity and package holidays (the latter mainly due to seasonal factors). Food prices fell -0.7% M/M, while electricity prices fell -36.8% Y/Y on the back on base effects.
• Upward contributions to the monthly CPI figure came from clothing, fuel and congestion charges. Note that the CPIF figure is not affected by changes in interest rates on household mortgages, which was an upward contributor to the CPI print.
• Services remain strong but off highest levels, with recreation and culture prices rising 11.2% Y/Y (vs 14.0% prior) and restaurants and accommodation prices rising 7.5% Y/Y (vs 8.3% prior).
• There is no standout reason why the print fell below consensus, with all major components acting broadly in line with what analysts had expected. It is likely that the disinflation forces in August were simply stronger than expectations coming into the release.