Flodén: Inflationary pressures are far too high

CPIF Inflation fell from 4.7 per cent in August to 4.0 per cent in September. Inflation is thus moving in the right direction, but the rapid decline is largely driven by energy prices being considerably lower than last year. When energy prices are excluded, inflation was 6.9 per cent in September.

Even looking at high-frequency price movements, such as changes in the last month or in the past three months, the rate of increase for goods and services is high, observed Mr Flodén. “In September, for example, the price of international travel and fruit and vegetables increased significantly faster than our forecast. Although these are product groups where price movements are often large and may be due to temporary factors, they are also product groups that have a large import element. The weak krona is not helping the fight against inflation. We have previously pointed out that the krona may have a greater impact than usual on prices at a time when inflation is high. Perhaps it is such an impact that we are beginning to see in the inflation figures for September.”

“Inflation is moving in the right direction, but there is still some way to go before we can say that inflationary pressures have normalised. Given this, it is becoming increasingly clear that monetary policy needs to remain contractionary for quite some time to come.”