Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Swedish inflation slows in August; Riksbank still expected to hike next week

by Uma
0 comment
2023 09 14T072520Z 2 LYNXMPEJ8D065 RTROPTP 4 HEALTH CORONAVIRUS SWEDEN

Swedish inflation slows in August; Riksbank still expected to hike next week

STOCKHOLM (Reuters) – The pace of headline Swedish inflation slowed more than expected in August, official data showed on Thursday, but analysts believe it will not be enough to prevent the central bank raising its policy interest rate next week.

The consumer price index measured with a fixed interest rate (CPIF) fell 0.1% in August from the previous month but was up 4.7% from the same month last year, Statistics Sweden (SCB) said.

The central bank targets 2% CPIF inflation.

Excluding volatile energy costs, inflation was 7.2%, slowing from 8.0% the previous month and against a forecast of 6.9% from the Riksbank.

“With the labour market still very tight and policymakers concerned about underlying price pressures and the weakness of the krona (crown), the Riksbank will still implement a further 25 basis point rate hike next week,” Andrew Kenningham, chief Europe economist at Capital Economics, said in a client note.

The statistics office said lower electricity, food and package holiday prices contributed to the slowdown in headline inflation.

The Riksbank had forecast headline inflation at 4.8% on an annual basis. Analysts expected it to be 4.9%.

Headline inflation was 6.4% in July.

Raising the policy rate to 3.75% in June, the Riksbank said it expected to tighten policy at least one more time this year. It announces its next policy decision on Sept. 21 with a hike to 4.0% widely expected.

However, the central bank is worried that the crown, at its weakest-ever level against the euro, is adding to inflationary pressure, indicating a hike in September may not be the end of the bank’s monetary tightening cycle.

Moreover, an interest rate hike by the European Central Bank later on Thursday or in the months ahead may force the Riksbank to tighten again, despite the slowing economy.

“The crown needs to be stronger in order to help get inflation under control,” said Lars Kristian Feste, head of fixed income at Ohman Funds. “The rate difference internationally is still the most important factor for the crown if it is to stabilise and get stronger.”

 

(Reporting by Simon Johnson; Editing by Niklas Pollard and Christopher Cushing)