Swedish Krona: Riksbank set to hold despite core pressure – Nomura
Nomura strategists highlight that Swedish CPIF ex-energy inflation surprised to the upside in July even as headline CPIF slowed, largely due to government fuel duty cuts and public transport subsidies.
Nomura strategists noted that Swedish CPIF ex-energy inflation unexpectedly increased in July, while overall headline inflation decelerated. They attribute this to government fuel duty reductions and public transport subsidies. Nonetheless, they anticipate the Riksbank will maintain its policy rate steady in 2026. July's flash CPIF inflation slowed to 0.7% year-over-year, lower than previous estimates, despite a surprising increase in CPIF ex-energy to 0.6% year-over-year.
The reduction in headline inflation was mainly due to the government's SEK3 fuel duty cuts and a temporary 50% discount on public transport passes, which will likely lessen inflation by over 0.1 percentage points in the second half of the year. Underlying inflation momentum appears robust, as CPIF ex-energy rose by 0.4% month-over-month in July, aligning with the July 2017-18 average.
Despite recent economic optimism and a 1.4% quarter-over-quarter GDP growth in Q2, Sweden's high unemployment rate prevents the Riksbank from altering its policy rate this year.
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