Many Swedes woke up on Wednesday morning to the news that inflation still remains below the Riksbank’s target, which is a CPIF of two percent. In the long run, the announcement could be very favorable for the Swedes and their households.
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That means the Riksbank’s message
Inflation is measured in different ways. One way is to measure prices and compare these over time in an index. This results in the CPI, i.e. consumer price index.
Another way is KPIF. It is the consumer price index but with a fixed interest rate.
In July, it appears that the inflation rate according to the CPI was 2.6 percent, the same as in June. In contrast, the inflation rate according to CPIF rose to 1.7 percent.
Nordnet Bank’s savings account Frida Bratt explains in an interview with News24 what underlies the rate of inflation.
– The CPI remains at 2.6 percent, but it is the measure CPIF that everyone, including the Riksbank, is looking at. Then the effect of increased mortgage interest rates has been excluded, which is reasonable because these are automatically affected by the Riksbank’s policy rate.
She explains that the increase according to KPIF was, however, expected against the background of the Swedes’ summer holidays.
– That KPIF would increase in July was expected. This is largely due to a holiday effect as price increases on travel, hotels and restaurant visits contributed to the increase. The demand for these services simply increased when many people had holidays in July. However, the increase compared to June was somewhat larger than expected, which was 1.6 percent.
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Frida Bratt. Photo: Lars Pehrson/SvD/TT
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This is how you are affected by the inflation statement
Although the rate of inflation was expected according to Bratt, it may result in new information in the near future, especially interesting for mortgage borrowers.
– The important thing about today’s figure, however, is that inflation is both below the Riksbank’s own forecast of 1.8 percent and for the second month in a row below the target of 2 percent. With this, we can definitely put an end to the period of high price increases, which have been challenging for many people’s personal finances.
Bratt also emphasizes that the situation Sweden now finds itself in may turn out to be favorable for the Swedish people. She points out that the recent high interest rates and expensive fees may now come to an end, which may result in Swedish households saving money instead.
– In addition, today’s figure should mean that the Riksbank lowers the interest rate at next week’s interest rate meeting. I think we can expect a total of four interest rate cuts during the autumn, and perhaps more around the turn of the year. For mortgage borrowers, brighter times are definitely ahead.
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