Inflation

New inflation report: KPIF drops to 1.2% in September 2024

The latest inflation report from Statistics Sweden (SCB) shows that inflation according to KPIF (Consumer Price Index with fixed interest rate) has dropped to 1.2% in September 2024. This is a significant decrease from 1.7% in July and 1.3% in June. At the same time, the regular CPI inflation stands at 1.9%, down from 2.6% in July.

Riksbank's decisions and economic forecasts

With the recent decline in KPIF below the Riksbank's target of 2%, pressure is mounting on the Riksbank to consider a reduction in the repo rate, currently at 3.5%. The Riksbank has previously adjusted the rate several times over the past two years, but with the current trend, further cuts may be on the horizon.

Historical inflation development

To understand the current situation, it is important to look at the historical development of KPIF inflation:

• August 2024: 1.2%
• July 2024: 1.7%
• June 2024: 1.3%
• May 2024: 2.3%
• April 2024: 2.3%
• March 2024: 2.2%
• February 2024: 2.5%
• January 2024: 3.3%
• December 2023: 2.3%
• November 2023: 3.6%
• October 2023: 4.2%
• September 2023: 4%

This decline in inflation is a clear signal that the measures taken to combat inflation have had an effect. But what does this mean for Swedish citizens?

How does this affect citizens?

The decreased inflation can have several effects on citizens' economy, including mortgage rates, food prices, fuel prices, and energy prices.

Mortgage rates

With decreased inflation and potential cuts in the repo rate, mortgage rates are expected to decrease. Here is a calculation for mortgages with an assumed bank markup of 1%:

• Mortgage of 1 million SEK: Interest rate of 4.5% results in an annual cost of 45,000 SEK.
• Mortgage of 3 million SEK: Interest rate of 4.5% results in an annual cost of 135,000 SEK.
• Mortgage of 5 million SEK: Interest rate of 4.5% results in an annual cost of 225,000 SEK.

If the repo rate is reduced, for example, to 3%, mortgage rates could decrease to 4%, further reducing costs.

Personal loans

For personal loans, a reduction in the repo rate could also mean lower interest rates, making it cheaper to borrow money for consumption or investments.

Food prices and fuel prices

With lower inflation, we can also expect a slowdown in price increases for food and fuel. This would give households more purchasing power and contribute to a more stable economy.

Energy prices

Energy prices, which are often a significant part of households' expenses, could also be positively affected by lower inflation. Lower energy prices would reduce the costs of heating and electricity, which is particularly important as winter approaches.

Future outlook

With the current trend of decreasing inflation, we can expect the Riksbank to consider further interest rate cuts in the coming months. This could lead to a more favorable economic environment for both businesses and consumers.

However, it is important to note that economic forecasts are always associated with uncertainty, and it is crucial to closely monitor the developments.