Sweden: CPIF inflation eases more than expected in March
Latest reading: Consumer prices with a fixed interest rate (CPIF) inflation dropped to 2.3% in March from February’s 2.9%. The reading was in line with the Riksbank’s expectations and undershot those of the market, though it remained above the Bank’s 2.0% target. Looking at the details of the release, sharper declines in housing and transport costs outweighed a jump in food prices.
Still, the trend pointed up slightly, with annual average inflation coming in at 1.9% in March compared to February’s 1.8%. Core inflation—which excludes energy costs as well as the effect of interest-rate changes—was stable at February’s 3.0% in March, surprising the Riksbank and market analysts that had penciled in an acceleration. Meanwhile, consumer price inflation eased to 0.5% in March from February’s 1.3%.
Finally, consumer prices with a fixed interest rate fell 0.49% from the previous month in March, swinging from the 0.93% increase seen in February.
Panelist insight: Swedbank’s Carl Nilsson commented:
“The inflation outlook has turned a lot more complicated with the ongoing tariff trade war, defence spending bonanza, rapid SEK appreciation and potential Chinese export diversion from the US to Europe. On balance, we recently decided to revise our 3–9-month inflation forecast lower and remain slightly more optimistic about the near-term inflation development. On the longer term, however, it is clear that several of the disinflationary impulses from the past decades are reversing and increasingly point to more elevated inflation – relative to the depressed levels prior to the pandemic – in the not-too-distant future.”