Sweden: CPIF inflation falls to lowest level in over three years in June
Consumer prices with a fixed interest rate (CPIF) inflation eased to 1.3% in June from May’s 2.3%. June’s figure marked the lowest inflation rate since December 2020 and the first time the rate fell below the Riksbank’s 2.0% target since July 2021. Looking at the details of the release, the moderation was primarily driven by a slower rise in prices for food, housing and utilities, plus transportation.
Accordingly, the trend pointed down, with annual average inflation coming in at 3.2% in June (May: 3.6%). Moreover, consumer price inflation fell to 2.6% in June from the previous month’s 3.7%. Similarly, core consumer prices, which exclude energy costs and the effect of interest-rate changes, rose 2.3% in June, below May’s 3.0% increase. June’s print was the lowest since December 2021 and undershot both the Riksbank and market expectations.
Lastly, consumer prices with a fixed interest rate fell 0.02% in June over the previous month, contrasting the 0.16% increase recorded in May. June’s result marked the weakest reading since January.
Risks to the outlook for 2024 appear to be balanced. On the one hand, wage growth is anticipated to outpace inflation and housing prices are expected to recover, boding well for household wealth. But the boost to private consumption—and therefore demand-push inflation—from this will be limited by a higher unemployment rate and restrictive monetary policy. Accordingly, our Consensus is for average CPIF inflation to hover around the Riksbank’s target in Q3 2024–Q2 2025, and to fall comfortably below it thereafter.