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Inflation Fell More Than Expected — Lower Food Prices Keep Mortgage Rates in Check
Swedish inflation has fallen more than expected in April, with a dramatic drop in food prices keeping mortgage rates at current levels. This is evident from the preliminary figures from Statistics Sweden (SCB).
Low Inflation Figures Surprise the Market
CPI: -0.1% in April (from 0.5% in March), monthly change -0.6% CPIF: 0.8% in April (from 1.6% in March), monthly change -0.6%
These figures are significantly lower than what the market had expected and surprised many economists and players in the payment sector.
Food VAT Reduction Drives Down Inflation
The large decrease in food prices is the single biggest factor behind the low inflation. Food prices fell by as much as 5.5% from March to April, according to Sofie Öhman, price statistician at SCB.
"The VAT reduction from 12% to 6% on food is the clearest reason for the low inflation," says Sofie Öhman and confirms that the preliminary calculations match the final figures.
Effects on Consumer Payments
Lower food prices have a direct effect on consumer payment patterns:
- Increased purchasing power: Consumers have more left after food purchases, which can increase payment volume in other categories
- Payment frequency: Food purchases that were previously made in several smaller stores may now be concentrated to larger chains with discounts
- Digital payments: Swish and other digital platforms may see increased use as consumers have more disposable income
Contrast with Underlying Pressure
Despite the low inflation, there are underlying inflationary pressures that the financial sector must consider:
- Oil prices: High oil prices create inflationary pressure in transport and energy sectors
- Purchasing Managers' Index: Improved PMI indicators point to increased economic activity
- Currency development: Weaker krona can lead to higher prices on imported goods
Bank Reactions
Economists from the country's major banks have shared their view on the low inflation:
Interest Rate Hike Excluded
Avanza's economist Felicia Schön: "An interest rate hike is 'completely excluded'. We should rather talk about interest rate cuts."
Avanza's chief economist sees the low inflation figures as a sign that the Riksbank has room to cut interest rates going forward rather than raising them.
Warning from Danske Bank
Danske Bank's chief economist Susanne Spector: "There is greater drama in several price indicators. Despite the low inflation, we see high oil prices, improved purchasing managers' indices, and a weaker krona."
Danske Bank warns that the preliminary figures may hide underlying inflationary pressures that could become visible later in the year.
Payment Sector Perspective
DORA Compliance Under Interest Rate Variations
The Riksbank's interest rate decision has a direct connection to how banks and financial institutions plan their budget for IT security and DORA compliance. At lower interest rates, banks can free up more resources for digital investments.
Short-term vs Long-term Impact
Falling food prices provide a short-term boost to consumer payments, but the underlying situation is more complex:
- Short-term: Increased purchasing power can lead to increased payment volume
- Long-term: Inflationary pressure in other areas may counteract this effect
- Payment companies: BNPL services like Klarna are affected by consumers' interest rate expectations
Emerging Risks
Banks identify several risk factors for the payment sector:
- Geopolitical risk: Conflicts in the Middle East can quickly increase energy prices
- Interest rate sensitivity: Consumers' reaction to interest rate changes affects payment behavior
- Inflation spread: From food to other product groups
Next Announcement
Final inflation figures for April will be presented by SCB on May 13. Until then, the payment sector continues to analyze the latest developments and adjust their strategies accordingly.
For the Riksbank, the preliminary figures mean continued patience in monetary policy, while payment companies must handle a period of uncertainty regarding consumers' future purchasing power.
Sources
- Statistics Sweden (SCB), Quick CPI April 2026
- Dagens Nyheter, 2026-05-06
- Nordea, Annika Winsth
- Danske Bank, Susanne Spector
- Handelsbanken, Claes Måhlen
- Avanza, Felicia Schön