Today's figures are a reminder that inflationary pressures in Sweden were low before the war in Iran broke out. And that is because the krona has strengthened in recent years, combined with domestic cost pressures being moderate, says Torbjörn Isaksson.
The krona falls ten öre
The krona falls ten öre against the euro and six öre against the dollar after the inflation report from Statistics Sweden (SCB). And Swedish market interest rates are under downward pressure, while they are rising in other Western countries.
The unexpectedly low inflation in March is reducing expectations for increases in the key interest rate this year. Torbjörn Isaksson believes that the Swedish Central Bank can continue to wait at the current interest rate level of 1.75 percent, as long as the European Central Bank (ECB) does not make a prolonged series of interest rate increases.
An occasional interest rate increase from the ECB is not a problem. However, if the ECB were to raise rates many times, there is a probability that the krona will weaken in the short term and that the Swedish Central Bank will therefore also have to raise the interest rate, says Isaksson.
Transportation costs increased in March, while housing costs fell, according to Caroline Neander, price statistician at Statistics Sweden.
"One thing that surprised us here (in Statistics Sweden's preliminary March figures) was food prices. They were lower than expected. Service inflation was also lower than we had expected. On the other hand, the prices of other goods were a little higher than we had thought," says Torbjörn Isaksson.
Risk of global upward pressure on prices
He believes that the downward pressure on food prices - before the halving of food VAT in April - is due to cheaper raw materials and a krona effect.
Isaksson reminds us that with every day that the Strait of Hormuz is closed to civilian ships and the energy infrastructure around the Persian Gulf is damaged by the war in Iran, the risk of global upward pressure on prices increases, which also affects Swedish households and companies.
Then there is a positive economic scenario as well. The conflict could subside in a week or so, he says.
Then deliveries of gas, oil and other raw materials from the area can start again, according to Isaksson.
Then commodity prices would probably fall back. Not to the same level as before the war started, but they will still fall back, he says.
Inflation according to the CPIF measure - which excludes mortgage interest - unexpectedly fell to 1.6 percent in March, from 1.7 percent in February. Underlying inflation - which also excludes energy prices - fell to 1.1 percent from 1.4 percent in February.
Analysts had expected CPIF inflation of 2.2 percent and underlying inflation of 1.5 percent, according to Bloomberg. The Swedish Central Bank's inflation target is 2.0 percent in CPIF inflation.
Prices for food and non-alcoholic beverages fell 1.0 percent in March compared to February. This means zero price change for this product group compared to March 2025.
Prices for housing, water, electricity, gas and other fuels also fell, down 3.1 percent compared to February. At an annual rate, this represented a decline of 0.4 percent.
Other product and service groups with the same trend were furniture, household equipment and routine home maintenance, information and communication, recreation, sports and culture, and healthcare.
Source: Statistics Sweden (SCB)
