SEK: Low price pressures support Riksbank patience – Nordea

Nordea’s Chief Analyst Torbjörn Isaksson reports that Swedish producer and import prices for consumption goods remained weak in February, with domestic supply prices excluding energy falling 0.2% on the month and staying negative year-on-year. A stronger SEK and subdued cost pressures are weighing on prices. Despite uncertainty from the Middle East conflict, Nordea argues this low inflation backdrop allows the Riksbank to maintain a wait-and-see policy stance in the near term.

Soft prices and strong SEK ease inflation risks

"Swedish manufacturing industry’s producer prices rose in February by 0.2% over the month, but down 1.7% over the year."

"Producer and import prices for consumption goods (domestic supply, excluding energy) fell by 0.2% on the month in February."

"All in all, the producer and import prices for consumption goods came out largely as we had expected, i.e. low."

"Prices are pulled down by multi-year strengthening of the SEK exchange rate, and by the overall low cost pressures in Sweden."

"The inflation outlook is indeed muddled by the war in the Middle East, but the low starting point for inflation means that the Riksbank can continue to have a wait-and-see stance, at least in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)