December inflation preview Sweden
|December preliminary release
The preliminary estimate for December inflation will be released on Thursday, 8 January, with the full report to follow on 15 January. In November, inflation showed an unexpected decline, as core inflation fell by -0.6% m/m, bringing the yearly rate to 2.4%. November is typically a month of low inflation due to Black Friday-sales, and the downside surprise was driven by lower prices for package holidays. For December we expect a seasonally normal rise in inflation. Core inflation in December is expected to rise by 0.6%, bringing the year-on-year change to 2.6%. Energy prices have been low because of the mild winter weather, resulting in CPIF to be largely unchanged at 2.3%.
Structural changes
Reflecting on the volatile year we leave behind us; it is notable that higher inflation dampened consumer spending early this year. We observed that consumption grew as expected in nominal terms but was being held back in real terms. The year started with an unexpected technical “basket” effect, which lifted inflation. This wasfollowed by surging food prices in February and March which kicked off this year’s political debate on food prices which led to the upcoming reduced VAT on food. Inflation kept surprising on the topside, even if a temporary higher subsidy on VAT for home renovation helped to lower inflation from the summer onwards. Looking at indicators, we expect the underlying price pressure to be stable around the inflation target during 2026, but a return to the low inflation environment seen before the pandemic appears unlikely.
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