The Figure Keeping Higher Mortgage Rates at Bay for a Little Longer

Swedish inflation rose less than expected in August, offering households a reprieve from higher mortgage rates for now. The CPIF measure used by the Riksbank came in at 0.7% year on year, below the 0.9% analysts had expected.

The broader CPI measure stood at 0.3%. Statistics Sweden described the figures as preliminary, with no details yet available on how different price groups changed. The low reading also reflects temporary government decisions rather than only underlying price pressures.

The government cut food VAT from 12% to 6% from April through the end of the year. It also reduced fuel taxes and halved public transport prices. Those measures have helped push inflation unusually low in Sweden.

For households, the figures contrast sharply with the period at the end of 2022 and into 2023, when inflation exceeded 10% and hit many families hard. There had also been concern that higher oil prices linked in the article to the war between the United States and Iran could raise transport and food costs. Brent crude approached $100 a barrel on Monday, but the expected inflation pressure has not yet appeared.

The Riksbank targets 2% inflation under the CPIF measure. It held its policy rate at 1.75% at its latest decision and said inflation excluding temporary fiscal effects was relatively close to 2%. Even after the August increase, most analysts expect the bank to keep rates unchanged at its September 24 meeting.

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relatively close to 2 percent