Sweden's Inflation Declines in January, Sparking Discussion of Riksbank Rate Cuts

Sweden saw a notable decline in inflation rates during January 2026, signaling a potential shift in the Riksbank's monetary policy. According to preliminary data from Statistics Sweden (SCB), the inflation measure KPIF decreased to 2.0% from 2.1% in December, marking a year of lower inflation levels. The KPIF-XE, which excludes energy prices, also dropped from 2.3% to 1.7%, reflecting subdued underlying price pressures. These figures were accompanied by a slight rise in the broad inflation measure from 0.3% in December to 0.4% in January, a smaller increase than expected, driven mainly by energy prices and volatility in SCB's methodology.

The decline in core inflation outpaced analyst predictions, with expectations settling around 1.9%. Economic experts, including Swedbank's chief economist Mattias Persson and SEB's Jens Magnusson, highlighted the faster-than-anticipated inflation deceleration as opening the door for the Riksbank to consider interest rate cuts, possibly at the March 19 meeting or before summer. However, some caution remains, as Avanza's savings economist Felicia Schön emphasized uncertainty surrounding the Riksbank’s future rate trajectory despite an increased likelihood of cuts.

Factors influencing the inflation decline include lower energy prices, a stronger Swedish krona against the dollar, and stable wage and price expectations among households. The decrease in inflation offers positive prospects for Sweden's economic growth this year, following previously slow retail recovery and tentative GDP improvements.

Riksbank board member Per Jansson has reportedly expressed openness to voting for a rate cut, reinforcing market speculation. Nonetheless, the board is likely to seek further confirmation through sustained inflation declines and potentially a stronger currency before making a decision. SCB will provide more comprehensive statistics on price developments on February 20, which may influence upcoming policy considerations.