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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.”