Swedish July inflation slows to 0.7% as core price growth exceeds expectations

Sweden's July inflation, measured by the KPIF index, fell to 0.7%, matching market forecasts. The core inflation measure that excludes energy (KPIF‑XE) rose to 0.6% from 0.4% in June, outpacing analysts' expectations. A sharp decline in energy prices and temporary tax cuts on fuel and a new public‑transport subsidy contributed to the lower headline rate.

Analysts highlighted the surprise in core inflation. Andreas Wallström, chief economist at Swedbank, said the most important takeaway was that “core inflation came in higher than expected.” Amanda Sundström of SEB called the result “concerning” and warned it raises the risk of a rate hike later in the year, though a hike at the August meeting is unlikely. Susanne Spector, chief economist at Danske Bank, linked the overall drop to the fuel‑tax reduction and noted that inflation remains above the Riksbank’s 2% target, making a rate cut improbable.

The Riksbank is expected to keep policy unchanged for now, with the next decision scheduled for 20 August.