Sweden’s inflation rate drops from 2.1% to 1.3% in June

New data from Statistics Sweden (SCB) reveals that Sweden’s inflation rate, measured by the CPIF, has fallen to 1.3 percent in June. This marks the first time in three years that inflation has dipped below the Swedish central bank’s target of two percent.

The CPIF, which excludes households’ mortgage interest costs and is the measure followed by the central bank, indicates that inflation in Sweden decreased from 2.3 percent in May to 1.3 percent in June.

“This drop in inflation is even more significant than expected,” said SVT’s economic reporter Kristina Lagerström.

The central bank aims for an inflation rate of two percent. The last time inflation was below this goal was in September 2021.

“This is good news. Inflation is currently down, but it doesn’t mean prices are decreasing; they remain at the same high level we’ve been struggling with recently,” Lagerström explained. “However, prices are no longer skyrocketing. Inflation is an average of consumer prices, so there are still many goods that have increased in price. For instance, clothing has become five percent more expensive.”

Food prices have also risen by 1.1 percent.

“For mortgage rates, this figure likely means that the central bank feels more confident about reducing rates as soon as August and possibly several times throughout the fall. Homeowners with mortgages can probably be pleased with today’s news.”

SVT’s economic reporter cautioned, “There is absolutely a risk that inflation could surge again.” Numerous factors influence inflation, including major global events like the pandemic, the war in Ukraine, and the conflict in Gaza, which create significant economic uncertainties.

“These major events, along with the upcoming U.S. election, could impact the economy. The situation is extremely uncertain and difficult to predict. The current inflation figure does not signal an end to economic chaos.”

Inflation measured by the CPI, which includes increased interest costs, decreased to 2.6 percent in June from 3.7 percent in May.

“This will likely lead to real wage increases in the future. So far, wages haven’t increased as much as inflation, but now we expect to see real wage growth again,” Lagerström concluded.