Sweden: Negative inflation surprises in January – Nordea

A side-effect of the coronavirus is that we will have a substantial disinflationary vibe coming up in March and April, according to analysts at Nordea. EUR/SEK is currently at 10.533.  

Key quotes

“Energy prices will be down at least 20% year over year in April. We will see that across the globe in inflation readings and it leaves a generally dovish taste in our mouths.”

“The interesting thing is that the Riksbank already acknowledged this temporary disinflationary environment due to energy prices last week but refrained from doing much about it. Even the rhetoric was kept largely unchanged, which leaves us with a slightly constructive SEK outlook in the short-term.”

“The short-term caveat to that view is the January inflation report out this week. January is almost notoriously a month that brings about negative inflation surprises in Sweden and this year we also lean that way from a risk/reward perspective given that the setback in energy prices is about to filter into inflation readings.”