Inflation means that the prices of goods and services increase over time, which reduces the purchasing power of money.
For example, if inflation is 4 % per year, something that cost SEK 100 last year now costs SEK 104.
This means your money loses value if your interest rate is lower than the inflation rate.
Why does inflation occur?
Inflation happens when demand exceeds supply, or when production costs rise.
Common causes include:
Consumers and businesses buying more than what’s produced (demand-pull inflation).
Higher costs for raw materials, energy, or wages (cost-push inflation).
A weaker currency, making imports more expensive.
A small amount of inflation is normal – the Riksbank’s target is around 2 % per year, considered a healthy and stable level for economic growth.
How does inflation affect savings and interest rates?
For savers, inflation means that money loses value in real terms if the savings rate is lower than inflation.
For example, if you have SEK 100,000 at 2 % interest while inflation is 4 %, your balance grows to SEK 102,000,
but since prices have risen by 4 %, your purchasing power has effectively fallen by 2 %.
Inflation directly affects the Riksbank’s policy rate:
When inflation is too high, the rate is raised to cool the economy.
When inflation is too low, the rate is lowered to stimulate demand.
Banks like Nordiska are affected by these changes — when the policy rate rises, funding costs increase, leading to higher savings and lending rates.
How banks are affected by inflation
Inflation impacts banks through:
Higher funding and capital costs.
Lower loan demand when borrowing becomes more expensive.
Increased demand for savings accounts when interest rates rise.
A changing real value of deposits, since deposits are bank liabilities.
Stable inflation is therefore essential for both banks and customers.
Security at Nordiska
At Nordiska, all savings accounts are covered by the Swedish government deposit guarantee,
which protects your total deposits up to SEK 1,150,000 per customer, administered by Riksgälden.
This ensures your savings remain safe, even when inflation or interest rates fluctuate.