Sweden’s January CPIF and CPIF excluding energy were in line with the flash estimates. Services inflation was weaker than expected. Core services prices (excluding foreign travel and administratively set prices) fell.
Car rental prices dropped, and hotel accommodation prices declined, which was described as seasonal. Goods prices also fell, but not as much as expected.
Inflation Details Point To Softer Outlook
Nordea said the breakdown of the data suggests a weaker inflation outlook and could lead it to lower its inflation path. Nordea’s forecast for CPIF excluding energy was already below the Riksbank’s view even before the January release.
Nordea still expects the Riksbank to keep the policy rate at 1.75%. It said a rate cut is now a clear possibility.
The latest inflation data for January 2026 showed a large downside surprise in services prices. Core services inflation fell more than we expected, led by notable declines in car rentals and hotel accommodation. This unexpected weakness is an important detail for the Riksbank.
Overall, we see these details as dovish and consistent with a lower inflation path ahead. Because of this, we are revising our inflation forecast downward. While we still expect the Riksbank to keep the policy rate at 1.75%, a rate cut now looks clearly possible.
Market Implications For Rates And SEK
This follows the Riksbank’s sharp rate cuts from a peak of 4.00% during 2024 and 2025 to support the economy. The recent rebound has been strong, with GDP up 0.7% in the last quarter of 2025, which complicates the decision. This strength is the main reason not to cut rates right away.
For interest rate derivatives traders, the data supports positioning for a more dovish Riksbank than previously expected. The market may start to price a higher chance of a rate cut later this year, which could push front-end government bond yields lower. Strategies that benefit from falling short-term rates, such as buying put options on Swedish interest rate futures, may now look more attractive.
This potential shift should also be monitored in currency markets, especially for the Swedish krona. The prospect of lower rates compared with other central banks could put fresh downward pressure on SEK. Traders could consider buying put options on the krona against the euro to position for further weakness.
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