TD Securities analysts note Swedish CPIF and CPIF ex-Energy inflation for March surprised sharply to the downside, driven mainly by weaker Food and Recreation, Sport & Culture prices, partly offset by petrol. They highlight that the central bank of Sweden, Riksbank had recently leaned hawkish, but argue that unless this weak inflation is quickly reversed, policymakers are likely to remain on hold for longer than previously signaled.

Weak CPIF print challenges hawkish stance

"Flash inflation for the month of March surprised materially to the downside in Sweden, with CPIF decelerating a tick to 1.6% y/y (mkt: 2.2%), while CPIF ex-Energy dropped 0.3ppt to 1.1% y/y (mkt: 1.5%)."

"The decline in inflation came principally from lower Food and Recreation, Sport & Culture prices, while petrol prices of course provided an offsetting boost to the headline CPIF measure."

"The Riksbank had been leaning in a hawkish direction at its last meeting, but this weak inflation data, if not reversed, might keep them on the sidelines for longer."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)