Swedish August inflation preview: Warm and windy

Nordeas chefsanalytiker Torbjörn Isaksson är mycket kompetent, hög kvalitet:
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Sweden Macro
Article by Torbjörn Isaksson


We see CPIF inflation at 1.3% y/y in August. Core inflation is higher and close to the target.

Windy August
There was a broad based drop in energy prices in August. In particular, warm and windy weather pulled down electricity prices. Spot prices for electricity on Nord Pool were negative for five full days in all four price regions and averaged SEK 0.16/kwh in August, one of the lowest readings over the past 20 years. Coupled with reduced prices of fuel, energy prices pulled down CPIF by around 0.2% point on the month, according to our estimates.
There was a seasonal downturn in prices of foreign travel in August, and food prices were down somewhat after the sharp uptick in July. Congestion charges were hiked again after seasonal break in July, adding 0.1% point to CPIF on the month and twice as much to services. Also, prices for several other goods, for example clothing and footwear, were raised after the summer sales.


Prices for hotels, car rental and recreational services have been volatile over the past year. They were hiked in July, and will probably decline again in the coming months. The timing is tricky but these prices will partly be reduced in August, we think. Looking through the volatility, the underlying trend for services inflation is softening.