The Swedish economy and retail sector are in a more stable phase. According to HUI Research's annual economic outlook report, low inflation, a more stable interest rate environment, and fiscal budget stimulus have strengthened the purchasing power of Swedish households. Despite these underlying economic conditions, HUI is slightly lowering its forecast for household consumption to 2.7 percent, compared to the previous 2.9 percent, for the full year 2026.
The reason for the revision is not a lack of capital among consumers, but rather increased caution. Instability in the outside world, including the war in the Middle East, and high electricity prices contribute to a subdued mood among households.
It is not empty wallets holding back consumption right now, but household uncertainty. The war in the Middle East and high electricity prices have made consumers hesitant despite low inflation, rising real wages, and fiscal stimulus having made purchasing power historically strong. The assessment is still that the positive forces outweigh the negative, and that consumption will pick up again during the year. Purchasing power is stronger than sentiment, says William Lindquist, analyst at HUI.
The GDP forecast remains at a stable growth of 2.3 percent for 2026. The forecast for total retail sales in current prices is also maintained at 2.5 percent for 2026 and 3.5 percent for 2027.
Durable goods retail is expected to see a boost as a result of the strengthened purchasing power. HUI estimates that growth in current prices will amount to 4 percent during the current year. However, there are variations between sub-sectors. Discount retail is strong, while fashion retail faces challenges from second-hand players and foreign e-commerce. HUI notes that the abolished duty-free status for extra-European low-price goods may, in the long run, strengthen the competitiveness of Swedish retailers and e-commerce companies.
Regarding grocery retail, the forecast for 2026 is 0.5 percent in current prices. The figure is affected by the halved food VAT, which is now noticeable in grocery stores. Underlying cost increases in supply chains are still expected to continue to play a role.
Prices are predicted to rise again, but the price level is forecast to remain lower than it would have been without the VAT reduction, says Emma Hernell, CEO of HUI.