October’s consumer prices data highlight the contrasting inflation outlooks in Sweden, Switzerland and Norway. In Sweden, consumer price inflation picked up to its strongest rate in four-and-a-half years. And the krona’s depreciation, as well as the strength of economic growth, suggest that it will pick up further. Despite all this, the Riksbank has signalled that it intends to loosen monetary policy further – a move that we think it will have to reverse next year. Meanwhile, October was the two-year anniversary of negative consumer price inflation in Switzerland. And core inflation slowed to a seven-month low. While the headline rate should pick up as energy effects fade, households’ expectations remain consistent with negative core inflation. By contrast, Norway’s inflation rate remains the highest in the region.This was despite the Norges Bank’s preferred measure remaining at a joint 15-month low. But inflation looks set to fall sharply over the coming months, as spare capacity has opened up in the economy and the effects of the krone’s previous depreciation fade.
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