Inflation

Inflation in December 2024: CPIF Drops to 1.5%

The latest inflation report from SCB shows that CPIF (Consumer Price Index with Fixed Interest) for December 2024 stands at 1.5%, indicating a stabilization compared to November. This marks a significant change from the high inflation levels observed during 2023, when CPIF reached as high as 9.4% in February.

Riksbank's Decisions and Economic Forecasts

With a continued low inflation rate according to CPIF, the Riksbank may consider adjusting the repo rate further. The repo rate has gradually been lowered from 4% at the beginning of 2024 to the current 2.5%. This trend may continue if inflation remains low, potentially leading to lower borrowing costs for households and businesses.

The regular CPI inflation, which takes interest rate changes into account, stands at 0.8% for December. This is a decrease from 1.6% in November and indicates a stabilization of price levels in the economy.

How Does This Affect Citizens?

The current inflation level and the Riksbank's interest rate policy can have several implications for Swedish citizens. A lower repo rate may lead to lower mortgage rates, which is good news for homeowners and those planning to buy property. Here is a calculation of what a mortgage might cost under the current interest rate scenario:

• 1 million kronor: With an assumed mortgage rate of 3.5% (repo rate 2.5% + bank margin 1%), the annual interest cost would be approximately 35,000 kronor.
• 3 million kronor: With the same rate, the annual interest cost would be approximately 105,000 kronor.
• 5 million kronor: With the same rate, the annual interest cost would be approximately 175,000 kronor.

For personal loans, interest rates are also expected to decrease, making it cheaper to finance consumption or other investments.

Expectations for Food Prices, Fuel Prices, and Energy Prices

With the current inflation rate, food prices are expected to stabilize, providing households with some economic relief after recent years of price increases. Fuel prices, which are often influenced by global factors, may also be kept in check if the global economic situation remains stable.

Energy prices, however, may be more unpredictable, depending on weather conditions and international energy policy decisions. But with stable inflation and potentially lower rates, households can expect a more predictable cost structure for energy in 2025.

Summary

The latest inflation report indicates a stabilization of price levels in Sweden, which may lead to further adjustments in the Riksbank's rates. This could mean lower borrowing costs and a more stable economic situation for Swedish households. We will continue to closely monitor developments and report any changes in the Riksbank's decisions and economic forecasts.