Swedish inflation: April flash CPI

Danske Research Team Danske Bank A/S

April flash inflation showed a sharper decline than expected, with zero core inflation and the Riksbank's target variable, CPIF, at 0.8% year-over-year. The downside surprise was mainly due to services inflation, but energy prices were also lower than expected. The flash details indicate a full pass-through from the reduced VAT to food prices, which fell 5.5% month-over-month (see chart below).

Considering that indicators point to increasing price pressures, most recently today when the price component in services PMI increased further (see chart below), the situation remains concerning. Inflation risk is present, but today's low print gives the Riksbank a better starting point to manage higher price pressures.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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