Swedish inflation

Inflation doubled – energy prices drive the rise

Inflation measured as CPIF more than doubled—as expected—to an annual rate of 1.5 percent in September, up from 0.7 percent the previous month. This is shown by preliminary figures released this morning by Statistics Sweden (SCB).

CPIF excluding energy prices remained at the August level of 0.5 percent. A survey by Infront had predicted a rise to 0.7 percent.

The rise in CPIF is primarily due to increasing energy prices in the wake of the Middle East crisis. KPIF is the Consumer Price Index with a fixed mortgage interest rate—meaning it is adjusted to exclude the impact of changes in mortgage interest rates. It also serves as the Riksbank’s target variable for inflation.

Economists: Riksbank to hike rates despite moderate inflation

Today’s preliminary inflation figures held several surprises, writes Nordea chief analyst Torbjörn Isaksson in a commentary.

Core inflation—KPIF excluding energy prices—came in at 0.5 percent, slightly lower than the bank had anticipated. Food prices fell, whereas Nordea had expected an increase. Prices for other goods rose more than expected, while services inflation was slightly lower than the bank’s forecast.

"A seasonal drop in prices linked to summer holidays likely contributed to lower prices, but the low services inflation reinforces the view that domestic cost pressure remains moderate," writes Isaksson.

Despite this, Nordea maintains its forecast that the Riksbank will raise the interest rate in November and hike it again to 2.25 percent in February.

Danske Bank chief economist Susanne Spector agrees.

"A hike in November was more or less a done deal already. This outcome doesn't change that," she tells the news agency TT.

However, Spector anticipates that three rate hikes will be necessary.

Torbjörn Hållö, an economist at the trade union confederation LO, sees no need for a higher key interest rate following today’s so-called "flash" CPI figures.
"The Riksbank should take it easy and avoid stifling the recovery," he writes on X.

Clothing and footwear prices rose – food prices fell

Higher energy costs and a weaker krona account for most of the doubling in inflation seen in September, though price trends vary significantly across different product categories, reports TT.

Clothing and footwear saw the largest increase, with prices rising by 2.4 percent compared to August.

Prices for housing, electricity, gas, and fuels rose by a total of 1.7 percent. Meanwhile, prices for furniture, household equipment, and routine home maintenance increased by 1.3 percent.

Prices for healthcare and transport rose by 0.9 percent.

Moving in the opposite direction, prices for food and non-alcoholic beverages fell by 0.8 percent compared to August. Insurance and financial services became 1.3 percent cheaper, according to TT.

Overall, the Consumer Price Index rose by 0.9 percent in September compared to the previous month.