Sweden Inflation October 2017


Sweden: Inflation drops in October

November 14, 2017

Consumer prices in Sweden dipped 0.1% in October on a month-on-month basis, contrasting the previous month’s 0.1% increase and undershooting analysts’ expectations of a 0.1% rise. Data released by Statistics Sweden (SCB) showed that the fall was driven by lower prices for health and transport.

Inflation came in at 1.7% in October, down from September’s 2.1% and undershooting market expectations. As a result, inflation moved below the Riksbank’s 2.0% target, while remaining within the Bank’s 1.0%-3.0% variation band. However, inflation was widely expected to fall back, as the string of strong readings over the summer were due in part to a change in the calculation method for package holidays. Meanwhile, annual average inflation came in at 1.8%, a notch above September’s 1.7%. Core inflation (CPIF), which is defined as the CPI with mortgage rates held constant, dropped from 2.3% in September to 1.8% in October.

October’s reading is likely to solidify the Riskbank’s dovish monetary stance. The Bank has already signaled its reluctance to raise rates before the ECB due to concerns over a strong krona, which could frustrate concerted efforts in recent years to bring inflation to target.

In its October Monetary Policy Report, the Central Bank downgraded its inflation outlook and now expects CPIF inflation to average 1.8% in 2018 and 2.1% in 2019. FocusEconomics Consensus Forecast panelists expect inflation to average 1.8% in 2018 and 2.0% in 2019, aided by highly accommodative monetary policy. However, the expected appreciation of the krona over the next few years will keep a lid on price increases.

Author:, Economist

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Sweden Inflation Chart

Sweden Inflation October 2017

Note: Year-on-year and month-on-month variation of consumer price index in %.
Source: Statistics Sweden (SCB).

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