Inflation

Inflation August 2025: KPIF rises to 3.2 percent

Inflation according to KPIF increased to 3.2 percent in August 2025, which is above the Riksbank's target of 2 percent. CPI inflation is significantly lower, at 1.1 percent, and the repo rate is now 2 percent.

Monthly figures

In August 2025, KPIF stood at 3.2 percent, up from 3.0 percent in July and 2.8 percent in June. KPIF remains above the inflation target of 2 percent. CPI, which is also affected by interest costs, was 1.1 percent in August, reflecting the recent interest rate cuts and indicating a much lower level than KPIF.

What does the outcome mean?

The rising KPIF inflation means that households and businesses continue to face increased prices for goods and services, which negatively impacts purchasing power. Despite the interest rate being cut during the year, price pressures remain, potentially making it more difficult for households to plan their finances. For businesses, higher inflation results in increased costs, especially for input goods and wages. The Riksbank may need to consider whether the current interest rate level is sufficient to curb inflation, but there is also a need to avoid overly slowing down the economy.

Mortgage examples and personal loans

With the repo rate at 2 percent, a mortgage with an assumed interest margin of 1 percent would have an interest rate of approximately 3 percent. For a loan of 1 million SEK, this results in a monthly interest cost of around 2,500 SEK; for 3 million SEK, about 7,500 SEK; and for 5 million SEK, approximately 12,500 SEK. In addition to interest, amortization affects the total monthly cost. For personal loans, the margin is often higher, around 2.5 percent, leading to an interest rate of about 4.5 percent given the current repo rate.

History and trends

KPIF has steadily increased since the beginning of the year. After a period of lower inflation at the end of 2024 (around 1.5 percent), KPIF has now climbed and exceeded 3 percent in the past two months. Meanwhile, CPI has fallen sharply, from 5.4 percent in January to 1.1 percent in August 2025. The repo rate has been gradually lowered from 4 percent in early 2024 to today's 2 percent.

Forecast and outlook

The continued high level of KPIF indicates persistent inflationary pressures, despite CPI and interest rate developments suggesting some slowdown. If price pressures are driven by sectors such as services or certain goods categories, it may take time for inflation to approach the target. The Riksbank may need to weigh inflation risks against the risk of a weaker economic outlook when making future interest rate decisions.

Frequently asked questions about inflation

• What is the difference between CPI and KPIF?
  CPI measures overall price development including interest costs for households, while KPIF excludes the effects of interest rate changes.
• Why does the Riksbank usually follow KPIF?
  KPIF provides a clearer picture of underlying price pressures because it is not directly affected by interest rate changes.
• How does inflation affect mortgage rates?
  High inflation can lead the Riksbank to raise the repo rate, which often causes mortgage rates to increase.
• What drives inflation upward?
  Common factors include increased costs for energy, food, or wages, as well as exchange rate changes.
• How quickly can inflation return to the target?
  It depends on how fast price pressures diminish and how the Riksbank acts, but it could take several months or longer.