Sweden: Inflation set to remain at a multi-year low – ING

James Smith, developed markets economist at ING, suggests that tomorrow's CPIF data of Sweden looks likely to show annual inflation at 1.1-1.2% - another three-year low.

Key Quotes

“Admittedly, much of this has to do with electricity prices, which have slipped quite noticeably on a year-on-year basis. Last year’s hot summer saw reservoirs dip, and that pushed electricity prices abnormally high for the time of year.”

“As that effect fades, we expect inflation to inch slightly closer to target – we’re pencilling 1.4% annual CPIF for 2020 (the Riksbank’s looking for 1.7%). But the medium-term story will depend heavily on wages.”

“While the Riksbank remains optimistic on the outlook for wages given the stronger projected productivity growth, there are increasing signs that wage growth will remain subdued.”