Sweden’s Latest Inflation Rate MoM: December 2025 Analysis and Macro Outlook
Key takeaways: Sweden’s inflation rate MoM unexpectedly fell by -0.40% in December, reversing two consecutive months of 0.30% gains. This marks a significant deviation from the 0.20% consensus estimate and signals easing price pressures. Core inflation components such as shelter and energy costs moderated, while monetary policy remains cautiously accommodative amid global uncertainties. Financial markets showed mixed reactions, with SEK weakening slightly. The outlook balances risks from external shocks and fiscal stimulus, suggesting a cautious but hopeful path toward inflation stabilization.
Table of Contents
Sweden’s inflation rate MoM for December 2025 registered a surprising decline of -0.40%, contrasting with the 0.30% rise in November and the 0.20% market forecast. This data, sourced from the Sigmanomics database, highlights a notable shift in price dynamics after a period of modest inflationary pressure. The 12-month average MoM inflation stands near 0.10%, underscoring the recent volatility in consumer prices.
Drivers this month
- Shelter costs eased, contributing -0.18 percentage points (pp) to the MoM change.
- Energy prices declined amid mild winter weather, subtracting -0.12 pp.
- Food prices remained stable, with negligible impact.
- Used car prices, a historically volatile component, dropped -0.05 pp.
Policy pulse
The current inflation rate sits below the Riksbank’s 2% target on an annualized basis, reinforcing the central bank’s cautious stance. The unexpected deflationary signal may delay further rate hikes, preserving accommodative financial conditions for now.
Market lens
Immediate reaction: The SEK weakened by 0.30% against the EUR within the first hour post-release, reflecting market surprise and recalibrated expectations for monetary tightening. Short-term government bond yields fell by 5 basis points, signaling reduced inflation risk premiums.
Examining core macroeconomic indicators alongside inflation reveals a mixed but cautiously optimistic landscape. GDP growth for Q3 2025 held steady at 0.40% QoQ, while unemployment remained low at 6.10%. Wage growth moderated to 2.30% YoY, consistent with subdued inflation pressures.
Monetary Policy & Financial Conditions
The Riksbank’s policy rate remains at 1.75%, unchanged since October. Financial conditions have eased slightly due to lower inflation expectations, with the real policy rate effectively rising. Credit growth remains stable, supporting consumer spending despite global uncertainties.
Fiscal Policy & Government Budget
Sweden’s fiscal stance remains expansionary, with a 2025 budget deficit forecast of 1.80% of GDP. Recent stimulus measures targeting green investments and social welfare may support demand but risk reigniting inflation if supply constraints persist.
External Shocks & Geopolitical Risks
Global energy prices have softened due to easing tensions in Eastern Europe, reducing imported inflation. However, lingering supply chain disruptions and geopolitical uncertainties in Asia pose downside risks to inflation stability.
This chart highlights a clear inflection point in Sweden’s inflation trajectory. The sharp MoM decline suggests easing demand-side pressures and improved supply conditions. If sustained, this trend could reduce the urgency for aggressive monetary tightening in early 2026.
Market lens
Immediate reaction: SEK/USD depreciated 0.30% post-release, reflecting market recalibration. The 2-year government bond yield dropped 7 basis points, signaling lower inflation risk premiums. Breakeven inflation rates for 5 years also declined by 10 basis points.
Looking ahead, Sweden’s inflation outlook balances several competing forces. The recent deflationary print introduces uncertainty but does not guarantee a sustained downward trend. Key scenarios include:
Scenario Analysis
- Bullish (30% probability): Inflation stabilizes near 1.50% YoY as supply chains normalize and energy prices remain subdued. Monetary policy remains steady, supporting growth without overheating.
- Base (50% probability): Inflation fluctuates around 2% YoY, with moderate wage growth and fiscal stimulus offsetting external shocks. The Riksbank may cautiously raise rates once inflation signals firm.
- Bearish (20% probability): Inflation rebounds above 3% YoY due to renewed energy price shocks or stronger wage demands, forcing aggressive monetary tightening and risking growth slowdown.
Structural & Long-Run Trends
Sweden’s inflation dynamics remain influenced by structural factors such as demographic shifts, productivity growth, and digitalization. Long-term disinflationary pressures from technology and globalization may counterbalance cyclical inflation spikes.
Sweden’s December 2025 inflation rate MoM print of -0.40% marks a significant pivot in recent price trends. While this eases immediate inflation concerns, policymakers and markets must remain vigilant amid persistent global uncertainties. The balance of risks suggests a cautious approach to monetary policy, with fiscal measures and external developments playing critical roles in shaping the inflation path.
Investors should monitor wage growth, energy markets, and geopolitical developments closely. The interplay of these factors will determine whether Sweden can maintain price stability without sacrificing growth momentum.
Key Markets Likely to React to Inflation Rate MoM
Sweden’s inflation data typically influences currency, bond, and equity markets sensitive to interest rate expectations and economic growth. The following tradable symbols historically track inflation trends and monetary policy shifts in Sweden:
- SEKEUR – The SEK/EUR currency pair reacts strongly to inflation surprises, reflecting shifts in monetary policy expectations.
- OMXS30 – Sweden’s benchmark stock index, sensitive to inflation-driven changes in corporate earnings and consumer demand.
- USDSEK – Tracks SEK strength against the USD, often moving inversely to inflation surprises.
- BTCUSD – Bitcoin’s price often reacts to inflation data as an alternative inflation hedge.
- ERIC-B.ST – Ericsson’s stock, a major Swedish exporter, sensitive to currency and inflation-driven cost pressures.
Insight: Inflation Rate MoM vs. SEKEUR Since 2020
Since 2020, the SEKEUR currency pair has shown a strong inverse correlation with Sweden’s inflation rate MoM. Periods of rising inflation typically coincide with SEK appreciation against the EUR, driven by expectations of tighter monetary policy. Conversely, inflation dips often lead to SEK depreciation. This dynamic underscores the importance of inflation data for forex traders and policymakers alike.
FAQs
- What does Sweden’s latest inflation rate MoM indicate?
- The -0.40% MoM inflation rate in December 2025 suggests easing price pressures after months of moderate increases, signaling potential stabilization.
- How does this inflation reading affect monetary policy?
- The deflationary surprise may delay further rate hikes by the Riksbank, maintaining accommodative financial conditions in the near term.
- Why is inflation important for Sweden’s economy?
- Inflation influences purchasing power, wage negotiations, and interest rates, impacting overall economic growth and financial market stability.
Final takeaway: Sweden’s unexpected December deflation highlights a critical juncture for policymakers balancing growth and price stability amid evolving global risks.
SEKEUR – SEK/EUR currency pair, sensitive to inflation and monetary policy shifts.
OMXS30 – Sweden’s main stock index, influenced by inflation-driven economic changes.
USDSEK – USD/SEK forex pair, inversely correlated with inflation surprises.
BTCUSD – Bitcoin/USD, reacts to inflation as an alternative hedge.
ERIC-B.ST – Ericsson stock, impacted by inflation and currency fluctuations.
Sweden’s inflation rate MoM dropped to -0.40% in December 2025, down from 0.30% in November and below the 12-month average of 0.10%. This reversal marks the first monthly deflation since early 2024, signaling a potential cooling in price pressures.
Energy and shelter costs were the primary contributors to this decline, offsetting stable food and transportation prices. The chart below illustrates the sharp downward shift compared to the steady upward trend observed over the past year.