Sweden: CPI inflation steady in February, CPIF inflation dips
March 12, 2019
Consumer prices in Sweden rose 0.7% in February, contrasting January’s 1.0% decline, according to data released by Statistics Sweden (SCB). February’s price increase was mainly driven by higher prices for food and non-alcoholic beverages; clothing and footwear; and transport.
The CPI with interest rates held constant (CPIF) dropped from 2.0% in January to 1.9% in February, within the Central Bank’s 1.0%–3.0% tolerance band but once more undershooting the Bank’s expectations. Core CPIF inflation—which excludes volatile energy costs—was unchanged at 1.4%, while CPI inflation was stable at 1.9%.
It remains to be seen whether at the Riksbank’s next meeting on 24 April, lackluster inflation in recent months leads to a change in forward guidance over monetary policy; a rate hike is currently signaled for H2 2019.
According to Torbjörn Isaksson, economist at Nordea: “All in all, February CPIF was lower than we had expected but in line with our long-held view of low inflation being a long-term challenge for the Riksbank. The next rate hike is distant, we think, and the low inflation in the beginning of the year reinforces that view.”
Author: Oliver Reynolds, Economist