Sweden’s December CPIF MoM: A Deflationary Surprise and Its Macro Implications
The December CPIF MoM for Sweden unexpectedly fell by -0.20%, sharply missing the 0.30% consensus and reversing November’s 0.40% rise. This marks the first monthly decline since September, signaling cooling inflation pressures amid tightening monetary policy and subdued domestic demand. Core inflation components such as shelter and energy moderated, while external shocks and geopolitical tensions continue to cloud the outlook. Financial markets reacted swiftly, pricing in a slower pace of Riksbank hikes. The data underscores risks of a near-term growth slowdown, with fiscal policy and global uncertainties shaping the path ahead.
Table of Contents
The latest CPIF (Consumer Price Index with Fixed Interest Rate) for Sweden, released on December 4, 2025, shows a surprising monthly decline of -0.20%, contrasting with the 0.30% consensus and November’s 0.40% increase. This data, sourced from the Sigmanomics database, covers the Swedish economy’s inflation dynamics over the past month and compares recent trends with historical readings from the past six months.
Drivers this month
- Shelter costs eased, contributing -0.12 percentage points (pp) to the monthly decline.
- Energy prices fell by 1.50%, subtracting -0.05 pp from inflation.
- Food inflation remained stable, adding a modest 0.02 pp.
- Used car prices declined slightly, subtracting -0.03 pp.
Policy pulse
The CPIF remains below the Riksbank’s 2% inflation target on a MoM basis, signaling easing price pressures. This reading supports the central bank’s recent cautious tone on further rate hikes, suggesting a potential pause or slower tightening pace in early 2026.
Market lens
Immediate reaction: The SEK weakened 0.30% against the EUR within the first hour post-release, while 2-year government bond yields dropped 12 basis points, reflecting expectations of a less aggressive monetary policy stance.
Sweden’s CPIF MoM inflation has shown notable volatility in 2025. The current -0.20% contrasts with a peak of 0.70% in July and a series of positive prints through November. The 12-month average MoM inflation stands at approximately 0.15%, highlighting the recent softness as a deviation from the mid-year inflation surge.
Historical comparisons
- July 2025: 0.70% MoM, driven by post-pandemic demand rebound and energy price spikes.
- September 2025: -0.20% MoM, the last monthly decline before December, linked to temporary energy price dips.
- November 2025: 0.40% MoM, reflecting a brief inflation resurgence amid supply chain normalization.
Monetary policy & financial conditions
The Riksbank’s policy rate currently stands at 3.25%, up from 1.75% at the start of 2025. The recent CPIF print supports market expectations of a pause or minor 25 basis point hike in the upcoming meeting. Financial conditions have tightened, with mortgage rates rising and credit growth slowing, dampening consumer spending and inflationary pressures.
Fiscal policy & government budget
Sweden’s fiscal stance remains moderately expansionary, with a 2025 budget deficit forecast at 0.80% of GDP. Increased social spending and infrastructure investments aim to support growth amid global uncertainties. However, fiscal stimulus is unlikely to offset the disinflationary forces fully in the near term.
Used car prices, a historically volatile category, declined by 0.80%, contributing to the overall deflationary trend. Food prices remained stable, indicating limited cost-push inflation from this sector. The combined effect of these components pushed the headline CPIF into negative territory for the first time since September.
This chart highlights a clear cooling trend in Sweden’s inflation momentum, reversing the mid-year acceleration. The data suggests that inflationary pressures are easing, likely reflecting tighter monetary policy and subdued demand. This trend may persist if external shocks and fiscal stimulus remain contained.
Market lens
Immediate reaction: SEK/USD depreciated 0.25% post-release, while 2-year yields fell from 3.40% to 3.28%, signaling market repricing of Riksbank’s tightening path. Inflation breakevens also declined by 10 basis points, reflecting reduced inflation expectations.
Looking ahead, Sweden’s inflation trajectory hinges on several factors. The base case scenario (60% probability) foresees CPIF MoM inflation stabilizing near zero to 0.10% in early 2026, as monetary policy effects fully materialize and global commodity prices stabilize.
Bullish scenario (20%)
- Stronger domestic demand and wage growth push CPIF MoM above 0.30%.
- Energy prices rebound due to geopolitical tensions.
- Riksbank resumes rate hikes to counter persistent inflation.
Bearish scenario (20%)
- Global slowdown and weaker SEK drive deflationary pressures below -0.30% MoM.
- Fiscal tightening or external shocks depress demand further.
- Riksbank signals rate cuts by mid-2026 to support growth.
Risks & uncertainties
Key risks include volatile energy markets, geopolitical instability in Europe, and potential supply chain disruptions. Fiscal policy adjustments and global inflation trends will also shape Sweden’s inflation path.
Sweden’s December CPIF MoM print of -0.20% signals a notable easing of inflation pressures after a volatile 2025. This deflationary surprise challenges the Riksbank’s tightening narrative and suggests a more cautious monetary policy stance ahead. While fiscal policy remains supportive, external shocks and subdued domestic demand temper upside risks. Financial markets have quickly priced in these dynamics, with the SEK and bond yields adjusting accordingly. Structural trends such as digitalization and energy transition continue to influence long-run inflation dynamics, underscoring the complexity of Sweden’s macroeconomic environment.
Overall, the data points to a delicate balancing act for policymakers, who must weigh inflation risks against growth concerns amid a shifting global landscape.
Key Markets Likely to React to CPIF MoM
The CPIF MoM inflation reading is a critical gauge for Sweden’s economic health and monetary policy direction. Markets that closely track inflation dynamics and central bank policy will react strongly to such data. Below are five tradable symbols historically correlated with Sweden’s inflation trends and monetary policy shifts.
- ERIC-B – Ericsson’s stock is sensitive to Swedish economic cycles and inflation-driven cost pressures.
- SEKEUR – The SEK/EUR currency pair reacts sharply to inflation surprises and Riksbank policy shifts.
- ASSA-B – Assa Abloy’s shares reflect industrial demand and inflationary cost trends in Sweden.
- BTCUSD – Bitcoin often moves inversely to inflation expectations and monetary tightening globally.
- USDSEK – The USD/SEK pair is a key barometer of Swedish inflation and monetary policy sentiment.
Insight: CPIF MoM vs. SEK/EUR Since 2020
Since 2020, monthly CPIF fluctuations in Sweden have shown a strong inverse correlation with the SEK/EUR exchange rate. Periods of rising inflation typically coincide with SEK appreciation against the euro, reflecting tighter monetary policy expectations. Conversely, inflation dips like the December 2025 print often trigger SEK depreciation. This relationship underscores the currency’s sensitivity to inflation data and central bank guidance, making SEK/EUR a valuable hedge or trading instrument around inflation releases.
FAQs
- What is the significance of Sweden’s December CPIF MoM decline?
- The -0.20% MoM drop signals easing inflation pressures, suggesting slower price growth and potential monetary policy pause.
- How does the CPIF MoM affect Riksbank’s policy decisions?
- Lower inflation readings reduce pressure on the Riksbank to hike rates aggressively, possibly leading to a more cautious approach.
- Why is the CPIF MoM important for currency traders?
- CPIF MoM data influences expectations for interest rates, impacting SEK exchange rates and forex market volatility.
Key takeaway: Sweden’s December CPIF MoM deflationary surprise highlights cooling inflation and signals a potential pause in monetary tightening, with broad implications for growth, fiscal policy, and financial markets.
ERIC-B – Ericsson’s stock is sensitive to Swedish economic cycles and inflation-driven cost pressures.
SEKEUR – The SEK/EUR currency pair reacts sharply to inflation surprises and Riksbank policy shifts.
ASSA-B – Assa Abloy’s shares reflect industrial demand and inflationary cost trends in Sweden.
BTCUSD – Bitcoin often moves inversely to inflation expectations and monetary tightening globally.
USDSEK – The USD/SEK pair is a key barometer of Swedish inflation and monetary policy sentiment.
The December CPIF MoM reading of -0.20% marks a sharp reversal from November’s 0.40% and is well below the 12-month average of 0.15%. This decline is driven primarily by shelter and energy components, which have softened after months of upward pressure.
Energy prices fell 1.50% MoM, the largest monthly drop since March 2025, while shelter inflation slowed to 0.10% MoM from 0.40% in November.