The main question is whether this will feed through to consumer prices. Historically, the correlation between producer and import prices for consumption goods and the CPIF has varied. It has been rather weak in recent years. For instance, the weak trend in consumer prices over the past year was not indicated by domestic supply prices.
Nevertheless, the uptick is an indication that the weaker SEK will lift consumer prices. We don’t change our inflation forecast on the back of today’s figures, but we feel a bit more confident that CPIF-inflation will rise in H2 2014. The Riksbank’s inflation forecast still looks too high.
Producer prices rose by 2.8% y/y and export prices by a full 5.0% y/y in May, giving some welcome relief to Swedish exporters.
Details, producer prices, May:
Producer prices m/m: 1.1% (prior -0.4%)
Producer prices y/y: 2.8% (prior 1.6%)
Domestic supply, consumption goods m/m: 1.4% m/m (prior -0.4%)
Domestic supply, consumption goods y/y: 2.0% y/y (prior 1.2%)
Nordea