Sweden: Inflation bounced in April

April CPI came out at +0.4% on the month, just above forecasts at 0.3%. The main surprise was ticket prices for foreign flights, adding 0.2% point to the CPI m/m compared to our call at 0.1% point. The uptick in these prices is an effect of the late Easter as prices for travelling tend to rise during holidays. Other components came out largely in line with our forecast.

The year-on-year figure for CPIF rose to 0.5% from the surprisingly low zero level in March. The deviation to the Riksbank’s forecast narrowed to “only” 0.1% point from 0.3% point in March.

Despite the uptick in April, a rate cut in July is most likely. The Riksbank’s rate path clearly signals near term monetary easing. Inflation is still below the Riksbank’s forecast. The record-low March inflation is a warning that inflation may be very low. More actions from the ECB are in the pipeline. Moreover, our inflation forecast is lower than the Riksbank’s view for the coming months. Thus, we still see a rate cut in July more or less as a done deal.

As for details, food prices edged down while we saw a slight rise. This was balanced by somewhat higher than expected prices for clothing and footwear, adding 0.14% point to the CPI compared to our forecast at 0.10% point. Fuel prices as well as rents were raised, adding 0.1% point respectively, while prices for package travelling fell and shaved off 0.1% point, all as expected.

Details, April:
CPI m/m: 0.39% (Nordea 0.33; consensus 0.3; prior 0.0)
CPI y/y: -0.04% (Nordea & consensus -0.1; Riksbank 0.0; prior -0.6)
CPIF m/m: 0.4% (Nordea & consensus 0.4; prior 0.5)
CPIF y/y: 0.5% (Nordea 0.5; consensus 0.4; Riksbank 0.6; prior 0.0)
CPI: 313.89 (Nordea 313.72, consensus 313.67; prior 313.68)