If you remove energy prices and look at the underlying KPIF inflation, the market believes that the inflation rate remains at the same level as in January – 2.7 percent.
The result will come in the form of preliminary calculations from Statistics Sweden (SCB), which will be sent out on Thursday morning.
It's actually not that bad with electricity. The terms on the electricity market point quite sharply downwards in March and until June, electricity prices are expected to fall by 80 percent according to market pricing, says Olle Holmgren, chief strategist at SEB.
Cold weather makes electricity more expensive
The electricity price increase in February is connected to cold weather in the first half of the month and that energy prices in Europe rose somewhat at the beginning of the year.
Food prices are another component that maintains the inflation pressure. They appear to be rising according to producer prices and the National Institute of Economic Research's measurements, now expected to increase by around 4 percent in 2025, compared to last year's approximately 3 percent, according to Holmgren.
The Swedish Central Bank's inflation target is 2 percent. But the market expects, despite inflation now being clearly above this level, that the Swedish Central Bank Governor Erik Thedéen and his board will offer an interest rate cut this year – down by 0.25 percentage points to 2.00 percent sometime in May-August.
Believes in interest rate cut
Holmgren believes in a cut in May:
It's a bit uncertain if it will happen at all. But we still think that this increase in inflation looks like it will be temporary and that there is some uncertainty about the recovery in the Swedish economy.
The picture also includes that the probability of further interest rate cuts in the eurozone and the US is high.
A cut in the Swedish Central Bank's policy rate – which, among other things, tends to push down the interest rate on mortgages with variable interest rates – increases domestic demand and thus stimulates a higher inflation pressure in the economy.
