The Consumer Inflation Expectation for Sweden rose to 7.10% in November 2025, marking a 0.40 percentage point increase from October and reversing a downward trend since May. This figure remains below the peak of 9.50% recorded in April 2025 but is above the 12-month average of 7.90%. The persistence of elevated inflation expectations signals ongoing price pressures despite recent monetary tightening.

Drivers this month

• Energy prices stabilized but remain elevated, contributing 0.15 pp to inflation expectations.
• Housing costs, particularly shelter, added 0.18 pp, reflecting tight supply and rising rents.
• Food prices increased moderately, adding 0.10 pp amid supply chain disruptions.
• Used car prices showed a slight negative contribution of -0.05 pp, easing some inflation pressure.

Policy pulse

The 7.10% expectation remains well above the Riksbank’s 2% inflation target, underscoring the challenge for monetary policy normalization. The central bank’s recent rate hikes have yet to fully anchor expectations, suggesting a cautious approach to further tightening.

Market lens

Immediate reaction: The SEK weakened 0.30% against the EUR within the first hour post-release, while 2-year government bond yields rose by 12 basis points, reflecting increased inflation risk premiums. Breakeven inflation swaps for the next two years also edged higher, signaling market anticipation of sustained inflation pressures.

Sweden’s Consumer Inflation Expectation is a vital forward-looking gauge, closely tied to core macroeconomic indicators. Recent GDP growth slowed to 1.10% YoY in Q3 2025, down from 1.80% in Q2, reflecting weaker domestic demand. Unemployment held steady at 6.20%, while wage growth accelerated to 3.40% YoY, feeding into cost-push inflation.

Monetary Policy & Financial Conditions

The Riksbank has raised its policy rate by 125 basis points since early 2025, currently at 3.75%. Despite this, real rates remain mildly negative given inflation expectations above 7%. Credit growth slowed to 3.20% YoY, and mortgage lending tightened, but financial conditions remain accommodative overall.

Fiscal Policy & Government Budget

Sweden’s fiscal stance remains moderately expansionary, with a 2025 budget deficit forecast at 1.80% of GDP. Increased social spending and energy subsidies aim to shield households from cost shocks but risk fueling demand-driven inflation. The government’s medium-term plan targets deficit reduction by 2027.

Drivers this month

• Shelter costs contributed 0.18 pp, driven by rising rents and construction delays.
• Energy prices stabilized but remain elevated, adding 0.15 pp.
• Food inflation added 0.10 pp due to supply chain constraints.
• Used car prices eased, subtracting -0.05 pp from expectations.

Policy pulse

Despite aggressive rate hikes, inflation expectations remain elevated, suggesting a lag in monetary policy transmission. The Riksbank faces a delicate balance between curbing inflation and avoiding economic slowdown.

Market lens

Immediate reaction: SEK depreciated 0.30% vs. EUR, 2-year yields rose 12 bps, and breakeven inflation swaps increased by 8 bps, reflecting heightened inflation risk perception.

Looking ahead, Sweden’s inflation expectations could follow three main scenarios over the next 12 months:

Bullish Scenario (20% probability)

• Energy prices decline sharply due to global supply improvements.
• Monetary tightening anchors expectations near 3% by mid-2026.
• Fiscal consolidation reduces demand pressures.

Base Scenario (55% probability)

• Inflation expectations stabilize around 6.50–7.50%.
• Gradual Riksbank rate hikes continue, with moderate economic growth.
• Fiscal policy remains mildly expansionary but controlled.

Bearish Scenario (25% probability)

• External shocks (e.g., geopolitical tensions) push energy prices higher.
• Wage-price spirals intensify, pushing expectations above 8%.
• Monetary policy lags, risking de-anchored inflation expectations.

Structural & Long-Run Trends

Sweden faces structural inflation drivers including housing shortages and wage growth pressures. Demographic shifts and climate-related energy transitions may also influence long-term inflation dynamics. These factors underscore the importance of calibrated policy responses.

The November 2025 Consumer Inflation Expectation reading of 7.10% highlights persistent inflation concerns in Sweden. While below the spring peak, the recent uptick signals that inflation remains a central challenge. Monetary policy must navigate the fine line between curbing inflation and sustaining growth amid fiscal expansion and external uncertainties. Market reactions underscore the sensitivity to inflation data, with the SEK and bond yields adjusting swiftly. Policymakers should monitor evolving expectations closely to avoid entrenchment of inflationary psychology.

Key Markets Likely to React to Consumer Inflation Expectation

Sweden’s inflation expectations directly influence currency, bond, and equity markets. The USDEUR pair often reacts to shifts in SEK sentiment due to trade linkages. The OMXS30 index reflects domestic economic confidence tied to inflation outlooks. Fixed income markets, represented by SWE10Y, adjust yields based on inflation risk. The SEKEUR currency pair is a direct barometer of Swedish monetary policy expectations. Lastly, the BTCUSD pair sometimes reacts inversely to inflation fears as investors seek alternative stores of value.

FAQ

What is Consumer Inflation Expectation in Sweden?

It measures the average inflation rate consumers expect over the next 12 months, reflecting sentiment on price trends.

How does this indicator affect monetary policy?

Elevated expectations can prompt central banks like the Riksbank to tighten policy to anchor inflation near target levels.

Why is the November 2025 reading significant?

The 7.10% figure marks a reversal from recent declines, signaling persistent inflation concerns despite policy efforts.

Key takeaway: Sweden’s inflation expectations remain elevated and volatile, requiring vigilant monetary and fiscal policy coordination to prevent de-anchoring and economic disruption.