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.
Author: Oliver Reynolds, Economist