Sweden: prices for consumer goods rising

Producer price inflation eased further in December. The SEK weakened, which lifts prices, but this was counteracted by the sharp drop of petroleum prices. There was no consensus forecast available.

More important is domestic supply prices for consumption goods. Energy is not included in consumer goods. Prices for these goods were up by 0.3% m/m and 1.8% y/y in December.

Prices for consumption goods have risen gradually over the past year on the back of the weaker SEK. The upturn is feeding through to consumer prices, explaining the upward trend in CPIF excluding energy that we have seen the past six months. Although it is far from a perfect indicator, the rise suggests that core inflation should continue to rise in H1 2015, which should be of some relief for the Riksbank.

Elsewhere, figures showed that the trade balance remained close to zero in December. This was weaker than our forecast at SEK +3bn. There were one working day more than in December 2013.

The trend in exports remains subdued and imports have levelled out somewhat after the previous rather swift upturn (fixed prices, seasonally adjusted). Exports were roughly unchanged in Q4 on the quarter and will not contribute to lift quarterly GDP growth.

Details, December:

Producer prices:
Producer prices m/m: -0.3% (prior -0.4%)
Producer prices y/y: -0.1% (prior 1.3%)
Domestic supply, consumption goods m/m: 0.3% (prior -0.1%)
Domestic supply, consumption goods y/y: 1.8% (prior 2.2%)
Trade balance:
SEK: 0.4bn (Nordea 3bn; prior -0.1bn, revised from -0.7bn; December 2013 -0.2bn )
Exports of goods, current prices: 5% y/y (prior unrevised at 0%)
Imports of goods, current prices: 4% y/y (prior 4%, revised from 5%)