Sweden: CPIF inflation holds steady, slightly above target in May
Latest reading: Consumer prices with a fixed interest rate (CPIF) inflation was unchanged at 2.3% for the third straight month in May. 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 for the fifth month running. Looking at the details of the release, softer price pressures for food and a sharper decline in transport costs broadly offset a softer fall in those for housing.
As a result, the trend was unchanged, with annual average inflation coming in at April’s 1.9% in May. Core inflation—which excludes energy costs as well as the effect of interest-rate changes—dropped to 2.5% in May from April’s 3.1%, marking a five-month low and surprising the Riksbank and market analysts on the downside. Meanwhile, consumer price inflation eased to 0.2% in May from April’s 0.3%.
Finally, consumer prices with a fixed interest rate rose 0.14% from the previous month in May, easing from the 0.23% increase seen in April.
Panelist insight: Nordea’s Torbjörn Isaksson commented:
“The big picture is that momentum in prices increases have softened in recent months. Food prices have levelled out and prices for other goods have stabilised too after the rise around the turn of the year, perhaps helped by the stronger SEK. Services inflation is slightly higher than the Riksbank’s view, but in line with the 2% target and the deviation to the Riksbank’s view is small.”