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ECONOMY

Sweden’s inflation rises faster than expected

Sweden's inflation rate was slightly higher than expected last month, according to fresh figures.

Published: 14 August 2024 08:26 CEST
a person looking at the stock market in a newspaper
Inflation rose in Sweden in July, according to new figures. Photo: Oscar Olsson/TT

Inflation rose to 1.7 percent in July according to the CPIF metric, up from 1.3 percent in June, reports Statistics Sweden. 

CPIF, the consumer price index with mortgage rates taken out of the equation, is the inflation measurement used by the Swedish central bank, the Riksbank, whose goal is that inflation should remain relatively stable at around the two-percent mark. 

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Bloomberg reports that analysts had expected CPIF inflation to land at 1.6 percent.

The consumer price index including mortgage rates (CPI) remained unchanged at 2.6 percent. Analysts had predicted 2.5 percent.

Despite the higher-than-expected inflation, the Riksbank is still expected to lower the policy rate by 0.25 percentage points next week. 

That would put the policy rate, which is Sweden’s main interest rate, at 3.50 percent.

The policy rate is the central bank’s main monetary policy tool. It decides which rates Swedish banks can deposit in and borrow money from the Riksbank, which in turn affects the banks’ own interest rates on savings, loans and mortgages.

If bank interest rates are high, it’s expensive to borrow money, which means people spend less and as a result inflation drops.

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ECONOMY

Sweden in ‘clear recession’ as economy continues to tread water

Sweden is in a 'clear recession' according to nearly all indicators, said the country’s statistics bureau.

Published: 19 August 2024 11:38 CEST
Sweden in 'clear recession' as economy continues to tread water

“The Swedish economy is treading water. Activity in June 2024 was at the same level as in June 2022,” said Statistics Sweden economist Caroline Ahlstrand.

Statistics Sweden’s so-called “business cycle clock” – essentially a quadrant chart of the state and direction of the economy – shows that ten out of twelve metrics are below their long-term trend, and nine of them are firmly in the field that indicates a recession.

Those nine include the monthly GDP indicator, private sector production, household consumption, newly registered cars, exports of goods, private sector demand, orders in industry, retail trade durables, imports of good and the total number of hours worked.

Statistics Sweden’s business cycle clock. The quadrants show, from top left, expansion, slowdown, recession and recovery. In the green are household confidence (top left) and newly-registered trucks (top right). Photo: Statistics Sweden

It’s not all bad news. Sweden’s GDP showed a slight uptick in June, and the central bank, the Riksbank, has in the past year managed to bring inflation down below its two-percent target.

But despite the lower inflation, household consumption continues to fall, warn Statistics Sweden.

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The Riksbank is expected to again lower Sweden’s key interest rate, the so-called policy rate, by 0.25 percentage points on Tuesday, putting it at 3.50 percent.

The policy rate is the central bank’s main monetary policy tool. It decides which rates Swedish banks can deposit in and borrow money from the Riksbank, which in turn affects the banks’ own interest rates on savings, loans and mortgages.

If bank interest rates are high, it’s expensive to borrow money, which means people spend less and as a result inflation drops.

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