Sweden: CPIF inflation drops in December
Latest reading: Consumer prices with a fixed interest rate (CPIF) inflation fell to 1.5% in December from November’s 1.8%. The reading undershot market expectations, and was below the Riksbank’s forecast and its 2.0% target. Looking at the details of the release, a softer increase in food prices and lower housing prices outweighed a slower decline in transport costs.
Accordingly, the trend pointed down, with annual average inflation coming in at 1.9% in December (November: 2.0%). Moreover, core inflation—which excludes energy costs as well as the effect of interest-rate changes—rose 2.0% in December, a sharp drop from November’s 2.4% increase, surprising markets on the downside. Meanwhile, consumer price inflation plummeted to 0.8% in December from November’s 1.6%.
Finally, consumer prices with a fixed interest rate rose 0.25% from the previous month in December, below the 0.53% increase seen in November.
Panelist insight: Swedbank’s Carl Nilsson commented:
“Upcoming CPI figures for January will potentially be noisy – Statistics Sweden’s return to pre-pandemic reweighting practices should (intuitively) help contain the basket effect, although this is always uncertain – but our forecast aligns fairly well with the Riksbank’s in the near-term and today’s inflation outcome keeps the door well open for a rate cut at the next monetary policy meeting.”