In the most recent Monetary Policy Report, the Riksbank expressed a concern that (consumer) service inflation is not behaving as expected.
This was the prime reason for reducing its inflation forecasts.
However, this is nothing new to us, as we have argued repeatedly that inflation in 2017 was driven by a number of temporary price gains at the consumer level in the first half of the year; for example, tax hikes on energy, alcohol, electronics and unusually big increases in bank credit card charges, hotel prices and electricity grid fees.
Some of these will be repeated but not to the same extent. Hence, we expect consumer services inflation to slow again.
To read the entire report Please click on the pdf File Below: