Swedish households are heading into the election with a significantly stronger economy than during the worst years of the inflation crisis. Real wages are rising, interest rates have dropped, and households’ disposable incomes have recovered sharply.

According to SEB’s personal finance expert Américo Fernández, real disposable income is now at the highest level ever measured.

This development stands in stark contrast to the situation following the 2022 election. At that time, inflation soared while the Riksbank quickly raised interest rates. Swedish households, who largely have mortgages with short fixed-rate periods, were hit particularly hard.

Earlier this year, Riksbank Governor Erik Thedéen stated that during the high-inflation years, Swedish households saw both their real incomes and consumption squeezed harder than households in many other countries.

Now, the trend has reversed.

Purchasing Power Returns

The Riksbank estimates that households’ purchasing power has been strengthened by rising real wages since 2023, and that real disposable incomes will continue to increase in 2026.

New statistics from Statistics Sweden (SCB) also show improvement. Inflation-adjusted disposable median income rose in the first three months of the year by between 2.9 and 3.6 percent compared to the same months last year.

Thedéen describes the situation as households regaining clearly stronger purchasing power. In addition to higher incomes, tax cuts have also contributed to the positive development, according to him.

SEB’s Fernández also points out that it is not just a matter of fiscal policy. The Riksbank’s interest rate cuts have played a major role, as lower interest rates both reduce household costs and increase room for consumption.

The Interest Rate Hit is Fading

Swedish households are unusually sensitive to interest rates because a large proportion of mortgages have short fixed terms. When the policy rate rose after 2022, the impact on household finances was swift. Now that rates have fallen, the effect is the opposite.

Fernández also notes that the job market has held up better than expected. Despite a weak krona, geopolitical tensions, and several years of sluggish economic growth, major Swedish companies have not carried out layoffs on the scale that might have further worsened households’ situation.

Nordea’s personal finance expert Anders Stenkrona describes the conditions ahead of this year’s election as significantly better than four years ago. The combination of lower inflation, lower interest rates, and rising real wages means that households today have considerably larger financial buffers.

Swedes Have Saved

Another difference compared to 2022 is household savings.

During the economically uncertain years, many Swedes have cut down on consumption and built up larger financial buffers. Stenkrona therefore believes that many households are better prepared even if the economy encounters new shocks.

However, that also means the picture is not the same for everyone. Highly indebted households and groups with small financial margins may still be under pressure. The Riksbank has also warned that households’ high debt levels make Sweden vulnerable to future interest rate hikes.

But on an aggregate level, the trend is clear: household finances have improved significantly since the inflation crisis.

Fernández therefore assesses that there is no general need for large new support measures for households. If inflation remains low while wages continue to rise, purchasing power will improve further without additional actions.

The election on September 13 will thus take place in an economic climate markedly different from the early years of the current mandate period – with lower inflation, lower interest rates, and household incomes once again at record levels.