Inflation rate drops below target in Sweden for first time since 2021

In June, the inflation rate according to the Consumer Price Index with Fixed Interest (KPIF), which excludes the effects of mortgage rates, was recorded at 1.3%. This marked the first time inflation dipped below the target of 2% since September 2021. The level is slightly below analysts’ expectations, who had forecasted July’s inflation to be at 1.6%. The inflation figure is reported by the national statistics office.

The KPIF measures price developments similarly to the Consumer Price Index (CPI) but does not account for direct effects from changes in monetary policy. The KPIF serves as the central bank’s targeted variable for measuring inflation.

Additionally, there are two other inflation measures computed by the national statistics office on behalf of the central bank: KPIF excluding energy (KPIF-XE) and KPIF with constant taxes (KPIF-KS). KPIF-XE excludes energy products from the KPIF, while KPIF-KS holds the taxes and subsidies related to the products in KPIF constant.

The Harmonized Index of Consumer Prices (HICP) is calculated by all EU countries and has slightly different coverage compared to CPI and KPIF, mainly due to the exclusion of some household housing costs.

The implications of low inflation for households were discussed, noting concerns about potential economic impacts, as the currency has also recently shown a decline, raising issues at a time that is generally viewed as unfavorable.