**As seen in Risk In The Week report 05/10/24, subscribe at cablefxm.co.uk/reports
Sweden consumer prices rose 2.2% Y/y in March, this was slower than the prior 2.5% and the consensus forecast of 2.6%. Slowing prices took the CPIF metric to the lowest level since August 2021 and closer to the Riksbank mandate. CPIF-ex energy rose by 2.9% Y/y, this was below expectations of 3.2%. March price data was released ahead of the Riksbank's monetary policy decision, the central bank lowered its repo rate by 25bps to 3.75%. Policymakers expect Swedish consumer prices to rise by 3.5% in 2024 before slowing to 1.5% next year.
The decision to lower rates wasn't fully priced in as a significant minority viewed the Riksbank holding rates until June, said economists at Scotiabank. Forward guidance showed a tone of caution as further rate cuts were signaled during 2H 2024, meaning that policy easing is not set to be continuous in June. A rate cut will be followed by April CPI metrics, and analysts at Nordea see an uptick to 2.4% Y/y on the back of higher food prices. Nordea added that food prices have been largely sideways since last year and they expect the trend to continue this year. Nordea sees the re- acceleration in the CPIF as temporary while they see low inflationary pressures.
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