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🇸🇪❗️Cable FX Macro Weekly Note: Sweden July Inflation Rate

**As seen in Risk In The Week report 08/12/23, subscribe at

Sweden's underlying inflation in July eased to 6.4% Y/y from the prior 6.7%, this was above the consensus forecast of 6.0%. Headline consumer prices increased by 9.3% Y/y, this was faster than the expected 9.0%. Transport, culture, and housing prices reported the biggest monthly upside, headline CPI posted a 1.1% rise, this was the fastest month since February. The report came to build expectations of a September Riksbank move, desks now pencil a 25bps increase in the repo rate. We remind you July data might reflect upward pressure due to holiday travels, however, economists at SEB said that this effect is likely to reverse next month. SEB sees CPIF ex-energy rising by 8.1% Y/y, CPIF at 6.5% and headline prices at 9.5%. SEB noted that forwards are already pricing lower electricity prices for the autumn months while cooling goods inflation sends signs of relief. As of June, Sweden continues to overshoot its central bank inflation target the most in the G10, prices currently stand 7.3 percentage points above target. FX dynamics are not helping Sweden, the krona has lost around 7% vs the dollar and 13% vs the euro over the last year.



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