September inflation is the event of the week in Sweden . We expect clothing prices to show a strong but normal rise, giving the biggest contribution to the monthly increase. In addition, Telia's 24% increase in fixed telephony subscriptions is expected to add sizeably as is international airline tickets and to some extent energy. Charter packages remain uncertain as the new methodology means we are in unchartered waters. No further drop in prices is assumed in our forecast. All in all, September CPIF inflation, hence, is expected to print 2.5% y/y, 0.1 above the Riksbank's forecast.
Prospera's money market inflation expectations may show some disparity. We would not be surprised to see some downward adjustment to one-year expectations, which should reveal some expectations of base effects. We expect longer horizons to be broadly unchanged.
We expect EUR/SEK to range-trade for now.
The main event in Norway is Tuesday's inflation numbers for September. Core inflation surprised on the upside over the summer but fell unexpectedly sharply in August on the back of lower food prices. We expect food prices to correct after the drop in August, taking the annual rate of core inflation back up to 1.2% in September. This would be in line with the projections in Norges Bank's latest monetary policy report and so would have a neutral market impact.
We expect further weakness in the Norwegian housing market
In Denmark , inflation numbers for September are released on Tuesday. Inflation was surprisingly strong over the summer, due mainly to increases in holiday home rents and package travel prices. We expect the tide to turn in September, however, with inflation down to -0.2% m/m and 1.3% y/y.
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