Inflation according to the KPIF measure, where interest rate effects are excluded, amounted to 1.5 per cent in October compared with 1.1 per cent the previous month. This according to the preliminary figures that Statistics Sweden (SCB) has now begun to report on a monthly basis.
The inflation outcome was slightly higher than market expectations, which according to the news agency Bloomberg were at 1.3 per cent.
Time for a pause?
A rising inflation could in theory mean that the Swedish Central Bank needs to pause with forthcoming interest rate cuts. However, this monthly figure does not have such significance, notes Andreas Wallström, chief economist at Swedbank:
There is a tolerance for inflation deviations from the Swedish Central Bank right now. Their main focus is the weak development of the economy. We see no signs of a turnaround there, so I don't think it affects the prospects for interest rate cuts going forward, says Wallström to TT.
Later this morning, the Swedish Central Bank will announce another interest rate decision, where market expectations are for a double cut, i.e. by 0.5 percentage points. The Swedish Central Bank's board members did not have access to today's inflation figure when they made their decision yesterday.
It was higher than expected. But even if they had had it, I don't think it would have changed it, says Nordea's chief analyst Torbjörn Isaksson.
Nothing that threatens
He shares Andreas Wallström's view that today's figure does not have great significance for the next interest rate decisions. Both of them do not believe that the 25-point cut that the market expects in December will be affected.
No, what can make us change our prognosis is rather what the Swedish Central Bank will communicate today. Let's say they open up for taking larger steps forward, then we'll have to take that into account, says Wallström.
There is nothing at present that can threaten that prognosis. What will be important for the Swedish Central Bank is when we start seeing a turnaround in domestic demand and household consumption. We're not there yet.
Olle Lindström/TT
Tobias Österberg/TT
Facts: Inflation outcome in October
TT
Inflation according to the KPIF measure, where interest rate effects are excluded, amounted to 1.5 per cent in October compared with 1.1 per cent the previous month.
Inflation according to the KPI measure amounted simultaneously to 1.6 per cent, the same as the previous month.
Adjusted for energy prices, inflation amounted to 2.1 per cent. This can be compared with 2.0 per cent the previous month and market expectations of 2.0 per cent.
