Swedish CPI: Soft inflation, but not soft enough for renewed Riksbank easing
Swedish inflation remains below target, but today’s release was firmer than the benign headline narrative suggested.
CPI matched consensus on the year, while CPIF and CPIF excluding energy both printed slightly above expectations. The message is therefore not one of renewed disinflation, but of contained inflation with enough firmness to keep the Riksbank cautious.
The key details matter here. CPI inflation was in line with expectations, but CPIF surprised marginally to the upside. More importantly, CPIF excluding energy also came in above consensus, suggesting that the downside inflation story is not entirely energy-driven. The annual CPIF rate, the rate Riksbank prefers to consider, still eased from the prior month, but the monthly prints were firmer than expected across the key measures.
That limits the scope for a dovish interpretation.
We still expect average inflation to remain well below target this year, even under a higher-oil stress scenario.
However, today’s data reduces the case for the Riksbank to lean explicitly dovish, especially given that underlying inflation was not weaker than expected. The activity backdrop reinforces that point. The GDP indicator was materially stronger than expected, with both monthly and annual growth accelerating versus the prior readings. That combination — below-target inflation but resilient growth — supports a prolonged hold rather than a renewed easing cycle.
For SEK, the release is mildly supportive. It does not deliver a hawkish shock, but it removes some downside risk from a softer inflation narrative.
The krona should therefore find some support from reduced Riksbank easing expectations, although broader EUR dynamics, global risk sentiment and oil volatility remain the larger drivers.
The policy conclusion is unchanged but better balanced. The Riksbank can still look through temporary oil-price swings because inflation expectations remain anchored and inflation is below the 2% CPIF target. However, today’s firmer-than-expected CPIF and core readings make it harder to argue for near-term easing. Today’s numbers confirm our earlier view, with a prolonged Swedish policy hold as the most likely outcome.