Sweden: CPIF drops to lowest level since July 2021 in December
Consumer price inflation with a fixed interest rate (CPIF) came in at 2.3% in December, down from November’s 3.6%. December’s reading marked the lowest inflation rate since July 2021. Looking at the details of the release, the deceleration chiefly reflected prices for housing, water, electricity, gas and other fuels rising at a softer pace in December. Additionally, food and non-alcoholic beverages price growth moderated. Conversely, prices for transportation rose at a stronger rate.
Accordingly, the trend pointed down, with annual average inflation falling to 6.0% in December (November: 6.6%). Meanwhile, consumer price inflation fell to 4.4% in December, from the previous month’s 5.8%.
Lastly, consumer prices with a fixed interest rate rose 0.63% over the previous month in December, accelerating from November’s 0.15% rise. December’s result marked the highest reading since June.
In coming quarters, average CPIF will slow gradually, and is expected to fall just below the Riksbank’s 2.0% target in Q4 2024. The delayed impact of high monetary policy in 2023, expectations of a strengthening krona through 2024 and a higher unemployment rate will all help reduce price pressures. Nevertheless, in 2024 CPIF is expected to still average above the official target.
Meanwhile, core inflation in December slowed from November, but it did so less than the Riksbank had anticipated. This could delay the Bank’s start of the loosening cycle to later this year, with rates remaining higher for longer.