Sweden's July Inflation Stays Elevated, Impacting Economic Forecasts
Inflation in Sweden reached 3.0% in July, sparking mixed reactions among economists concerning interest rate cuts and economic forecasts.
Key Points
- • Inflation rose to 3.0% in July, below the 3.1% expectation.
- • Riksbank's target inflation remains at 2.0%; rate cut prospects become complex.
- • Positive stock market response; OMXS index up 0.4%.
- • Economists predict potential for inflation drop post-summer.
In July 2025, Sweden's inflation rate rose to 3.0%, slightly below the anticipated 3.1%. Although this figure represents a small decline from the unexpectedly high 2.8% recorded in June, it remains well above the Riksbank's target of 2.0%. Economists have expressed disappointment with the inflation outcome, acknowledging that it complicates the central bank's decisions regarding interest rate adjustments. Susanne Spector, Danske Bank's chief economist, stated that the current figures diminish the likelihood of the Riksbank enacting a rate cut in August, depicting the situation as disheartening since inflation did not improve as expected.
SEB's chief economist Jens Magnusson noted that while the inflation rate was lower than forecasted, it does not suggest effective control over inflation. He indicated that a potential interest rate cut might be in the cards for September, depending on evolving economic conditions and external factors such as new trade tariffs from the USA. Meanwhile, Alexandra Stråberg, Länsförsäkringar's chief economist, viewed the recent inflation data as a 'cold shower' for both the Riksbank and Swedish households, cautioning against interpreting these numbers as indicators of economic stabilization.
Interestingly, despite the inflation concerns, the Stockholm stock market reacted positively to the inflation report, with the OMXS index rising by 0.4%. This upturn was fueled by growth in major firms like ABB and Sandvik, both experiencing a 1% boost. Looking ahead, SEB's Robert Bergqvist predicted a decrease in inflation following the summer months, while analysts express mixed sentiments regarding the future stability of sectors affected by trade dynamics.