Inflation rises after last month’s fall.
In July, it landed at 1.7 percent, according to the KPIF measure. Inflation is thus still below the target, but the increase was higher than expected.
Savings economist Frida Bratt believes we can count on more interest rate cuts than expected this autumn.
What do today’s inflation figures show?
Today’s inflation figures show that inflation did indeed increase somewhat more than expected compared to June, an increase to 1.7 percent against the expected 1.6 percent.
That inflation would go up a little compared to June was expected, and we can see that the rise is due, among other things, to price increases on travel, restaurant visits and hotels – which of course goes hand in hand with the fact that many people take advantage of this during their holiday in July with increased demand as a result. It’s simply a bit of a holiday effect. The important thing about today’s figure, however, is that inflation is still below the inflation target of 2 percent.
How does that affect the Riksbank’s actions at next week’s interest rate announcement?
The inflation rate increased slightly more than expected, but it is still below the Riksbank’s own forecast of 1.8 percent. It is important, because the Riksbank, based on its inflation forecast, has communicated that the interest rate may be lowered three times during the autumn.
I think it could be about four reductions this autumn, and maybe more around the turn of the year. This is because there is simply no reason to keep the interest rate at today’s level when activity in the Swedish economy is clearly slowing down. One does not want to cause a deeper recession than necessary, with rising unemployment as a result.
What does this mean for my wallet?
We are seeing improvements in households’ private finances. To begin with, we see that the fight against inflation has been successful, and thus a number of tough years with large price increases are now over. In addition, we have lower mortgage interest rates ahead of us. It is good to have in the back of the mind for those who are in the process of negotiating their mortgage. If you tie the interest rate now, you may miss out on part of the decline, as there may be more reductions than what is now priced in. Keep an eye on your bank so that the Riksbank’s interest rate cuts are fully reflected in your mortgage interest.