CPIF inflation, the consumer price index with the effect of mortgage rates removed, has fallen to 1.3 percent, down from 2.3 percent a year before.
This is lower than expected – economists at Bloomberg had expected inflation to drop to 1.6 percent.
Low inflation is good news for homeowners in Sweden – it increases the likelihood of the Riksbank lowering the key interest rate at its next meeting in August. The key interest rate currently stands at 3.75 percent after the bank lowered the rate for the first time in eight years in May.
The Riksbank’s goal is that Swedish inflation according to the CPIF measurement, remains stable at 2 percent, and it uses financial policy – like policy rate changes – to affect this, so low inflation is a sign that things are going as planned. This means that the Riksbank can take the pressure off households somewhat by potentially lowering the key interest rate.
Underlying inflation, where both mortgage rates and energy prices are removed, also dropped significantly, from 3 percent in June to 2.3 percent.
CPI inflation, where mortgage rates and energy prices are included, also fell.
“The inflation rate according to CPI was 2.6 percent in June, which is the lowest notation since September 2021,” Statistics Sweden statistician Sofie Öhman said in a press statement.
The agency said that household mortgage costs are still contributing significantly to the annual inflation rate, although electricity and fuel prices have decreased during the last twelve months.
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