Inflation

Inflation December 2025: Focus on KPIF and KPI

The KPIF inflation rate decreased to 2.1 percent in December 2025, but remains slightly above the Riksbank's target. The CPI inflation remains low at 0.3 percent. These figures influence both household finances and banks' interest rate decisions.

Monthly Figures

In December 2025, the KPIF stood at 2.1 percent, down from 2.3 percent in the previous month. Despite the decline, KPIF is still above the Riksbank's inflation target of 2 percent. The CPI inflation is significantly lower at 0.3 percent for the same month, indicating a continued difference between the two measures. KPIF excludes the effects of changes in mortgage interest rates, which is why it is often used as the main indicator for monetary policy.

What Does the Outcome Mean?

That KPIF now approaches but still exceeds the target indicates that price pressures in the economy are lower than earlier in the year, which can provide some relief for households and businesses. Lower inflation strengthens purchasing power and reduces upward pressure on prices. At the same time, inflation development influences the Riksbank's decisions on the policy rate, which is currently 1.75 percent. Continued low inflation increases the possibility of stable or lower interest rates in the future.

Mortgage Examples and Personal Loans

With a repo rate of 1.75 percent and an assumed markup of 1 percent, the mortgage rate is around 2.75 percent. For a mortgage of 1 million SEK, this results in a monthly interest cost of approximately 2,292 SEK; for 3 million SEK, about 6,875 SEK; and for 5 million SEK, approximately 11,458 SEK, excluding amortization. Household total monthly costs are also affected by the amortization requirement. For personal loans, a higher markup is often used, for example, 2.5 percentage points, which results in an interest rate of about 4.25 percent.

History and Trends

Throughout 2025, KPIF has moved from peak levels above 3 percent during the summer to the current level of 2.1 percent. The decline has been clear since autumn, with a particularly rapid decrease between October and December. CPI has been even lower during the same period, remaining close to zero during the fall and winter.

Forecast and Outlook

With KPIF close to the inflation target and CPI at low levels, inflationary pressures appear to have stabilized. If this trend continues, the Riksbank may have room to consider a more expansionary monetary policy, but decisions about the interest rate will still depend on upcoming inflation figures and developments in household consumption and business investments.

Frequently Asked Questions About Inflation

• What is the difference between CPI and KPIF?
  CPI includes all consumer prices, including the effects of changes in mortgage interest rates. KPIF excludes interest rate changes for mortgages and is often used as the main measure of inflation.
• Why does the Riksbank primarily use KPIF?
  KPIF provides a clearer picture of underlying inflation pressures because it is not directly affected by interest rate changes, making it more useful for monetary policy decisions.
• How does inflation affect mortgage rates?
  High inflation can lead to increased policy rates from the Riksbank, which in turn push mortgage rates upward. Low inflation can have the opposite effect.
• What drives inflation up or down?
  Inflation is influenced by energy prices, food prices, wage developments, and international factors.
• How quickly can inflation return to the target?
  This depends on various factors, including economic developments and the Riksbank's measures. Sometimes it can happen quickly; other times, it takes longer.