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Investing.com -- Despite a slight easing in March, the underlying inflation rate, excluding energy, is expected to remain high for the rest of the year, according to Capital Economics.
The firm predicts that the Riksbank, Sweden’s central bank, will maintain its policy rate at 2.25% during this period. However, the rising risks of a global downturn driven by tariffs have amplified the chances that central banks might need to alter their policies.
The inflation increase this year has been significantly influenced by "basket effects", but there are also indications of a surge in inflationary pressures. The Consumer Price Index for Industrial Workers (CPIF) inflation fell from 2.9% in February to 2.3% in March, a decrease entirely attributed to lower energy inflation.
This left the inflation rate notably below both the consensus prediction of 2.6% and Capital Economics’ forecast of 2.8%. The measure including energy remained steady at 3.0%, which was also below the consensus forecast of 3.2%.
Looking forward, Capital Economics projects that CPIF inflation excluding energy will remain around 3% for the rest of the year, and then slightly ease in 2026.
In its March Monetary Policy Report, the Riksbank presented arguments for tariffs causing either further inflation or disinflation. However, Capital Economics believes the latter scenario is more probable.
The increasing likelihood of a substantial global downturn has heightened the chances of policy easing, including in Sweden.
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