CPIF inflation, the measure of inflation which the Riksbank uses, fell to 1.5 percent in December according to new figures from Statistics Sweden, down from 1.8 percent a month prior.
This was lower than expected, with experts predicting that it would fall just 0.1 percentage point to 1.7 percent.
It’s also well below the Riksbank’s two percent target.
Experts believe that this could mean we see a cut to the key interest rate at the bank’s next meeting on January 29th.
Another important inflation figure is core inflation, where energy prices are excluded – partly because they can be volatile during the winter, throwing off the CPIF figures.
Core inflation dropped to 2.1 percent in December, down from 2.4 percent in November.
“Core inflation is close to the target,” Nordea’s head analyst Torbjörn Isaksson told the TT newswire. “That, together with the weak economy, makes it more likely that the Riksbank will lower the key interest rate in January.”
Olle Holmgren from SEB said much the same.
“This all makes it look like inflation is close to the target. And that increases the likelihood of a cut in January.”
Swedbank’s head economist Mattias Persson was also positive, adding that December’s lower than expected inflation figures make it more likely that the bank will cut the rate further in the future.
“There is reason to be more aggressive than the Riksbank has been so far.”
Last year, the Riksbank cut the key interest rate five times, from 4 to 2.5 percent, and they’ve indicated that there could be a further 0.25 point cut, to 2.25 percent in the beginning of 2025.
SEB and Nordea are both predicting two further cuts this year, with the key interest rate landing on 2 percent by the end of the year.
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