Inflation

Inflation in Sweden continues to decline: KPIF at 1.8% in November 2024

The latest inflation report from Statistics Sweden (SCB) shows that the inflation rate according to KPIF (Consumer Price Index with fixed interest rates) now stands at 1.8% for November 2024. This is an increase from 1.5% in October and marks a stabilization below the Riksbank's inflation target of 2%. At the same time, the underlying CPI inflation remains at 1.6%, indicating a continued slowdown in the pace of price increases.

Economic Forecasts and Riksbank's Decisions

This development means that the Riksbank may consider further adjustments to the repo rate, which was recently lowered to 2.75% from 3.25% in October. With inflation stabilizing below the target, there is room for the Riksbank to continue lowering the interest rate to further stimulate the economy. Economic experts predict that we may see another rate cut in early 2025, which could provide relief for households and businesses.

Mortgage Costs and Personal Loans

For mortgage borrowers, a potential rate cut means that borrowing costs could decrease. Here is a calculation of what a mortgage could cost at the current rate of 2.75% with a 1% markup:

• Mortgage of 1 million SEK: Annual interest cost of approximately 37,500 SEK.
• Mortgage of 3 million SEK: Annual interest cost of approximately 112,500 SEK.
• Mortgage of 5 million SEK: Annual interest cost of approximately 187,500 SEK.

For personal loans, interest rates can also be expected to decrease, making it more attractive for consumers to finance major purchases or consolidate debts.

Food Prices, Fuel Prices, and Energy Prices

With the reduced inflation rate, consumers can expect some stabilization in food prices, although they are still influenced by global factors such as weather and transportation costs. Fuel prices also tend to fluctuate, but with a more stable inflation, we can anticipate less dramatic price changes. Energy prices, often linked to international markets, may still experience variations depending on global events.

Historical Context and Future Outlook

Compared to last year, when inflation reached peaks of over 10% according to KPI, Sweden has now seen a significant decrease in inflationary pressures. This provides the Riksbank with a favorable position to continue with an expansionary monetary policy to support economic growth. Considering the current trend, we can expect inflation to remain under control in the coming months, providing households with some relief in their financial planning.

In summary, the latest inflation report paints a positive picture of Sweden's economic situation and indicates that we may continue to see stable prices and potentially lower interest rates in the future.