• Sweden edition
 
Housing costs cause Swedish inflation spike
English house in Helsingborg's Tågaborg district in Skåne, January 2009

Housing costs cause Swedish inflation spike

Published: 13 Jan 2011 12:12 GMT+01:00
Updated: 13 Jan 2011 12:12 GMT+01:00

A substantial increase in housing costs and higher prices for electricity and food raised Sweden's inflation rate to the unexpectedly high level of 2.3 percent in December, exceeding the central bank's, the Riksbank's, target.

Inflation stood at 1.8 percent in November. Consumer prices rose by 0.7 percent from November to December, according to Statistics Sweden.

However, as a Nordea analyst pointed out, the prices for electricity, food and accommodation typically increase during the fall and winter.

"It also contributes to rising inflation expectations," said Torbjörn Isaksson, chief analyst at Nordea, on Thursday.

A new round of wage negotiations is also expected in the autumn of 2011.

"There are things for the Riksbank to think about," said Isaksson.

In the immediate course of events, he believes that inflation will retreat somewhat when electricity prices fall ahead of the spring. However, oil and food prices will continue to rise, in line with global values.

"I think we will see even higher food prices in the future," said Isaksson.

Analysts had, according to a Reuters poll, on average expected a rise in consumer prices of 0.45 percent in December and an inflation rate of 2.15 percent.

The inflation rate is the average change in consumer prices in the last 12 months.

The underlying December inflation rates according to the CPIF and CPIX measures were 2.3 percent and 2 percent. The monthly change in both cases was 0.6 percent, the agency reported.

Higher housing costs contributed to the higher inflation rate by 1.4 percentage points, higher electricity prices by 0.6 percentage points and higher interest expenses by 0.5 percentage points. Rising food prices contributed an additional 0.4 percentage points.

However, the inflation figure was somewhat lower than Swedish bank Handelsbanken's economists had expected. Electricity prices, 15 percent higher than a year ago, were behind much of the rise in inflation.

"Electricity prices rose even more than we anticipated," said Anna Råman, an economist at Handelsbanken, on Thursday.

The agency's figures supported Handelsbanken's forecast of the Riksbank's future actions.

"We believe that the Riksbank will raise interest rates at each of its meetings until late 2011," said Råman.

TT/The Local/vt (news@thelocal.se)

Don't miss...X
Left Right

Your comments about this article

12:32 January 13, 2011 by Nemesis
If you base growth in your economy on house price rises, that is what you get.

We had the same thing in Ireland a few years ago.
14:21 January 13, 2011 by hjoian
New house / apartment developments are in dire need in Sweden. The lack of housing pushes up the prices of existing stock,in a typical supply and demand situation. Mortgage lending should be based on a much higher deposit being paid by the purchaser. Its not rocket science to see what will happen if this trend continues.....
15:17 January 13, 2011 by Mib
@Nemesis

Sweden's property prices are well behind the UK market and probably equal or maybe a bit more than the Irish prices now that they have almost halved in price in some parts. Even at the peak of property prices - pre credit crunch, Sweden's prices were well below other comparable European countries.

Property prices have continued to increase after the credit crunch dip, purely due to a decent economy, which is not being dragged down by massive debts and reckless bank ledning. Also, they recently stated that banks can only lend up to 85% of a property's value. Furthermore, the amateur landlords are very few and far between in Sween due to the hosuing associations strict rules on ownership, which combined with apartment rental rules, means that the market has not been artificially pushed higher.

Ireland is the land of the builder and believed too much in the Celtic Tiger, which was all based on credit. Their housing market collapsed due to the amateur landlords borrowing too much and not being able to afford the repaymenst when borrowing became expensive. Add to the fact that the supply was much more than the demand, then as my cousin has experienced their house price dropped by 50%!! Now, lots of young Irish are leaving to find opportunities abroad...just as they did 30 years ago and more.

The UK market is robust due to demand being higher than supply, but the inability to borrwo money has meant prices have dropped. however, the landlords don't need to sell as more and more have to rent, which has increased rental prices in good locations.
17:03 January 13, 2011 by Swedesmith
Come to America, you can buy a house cheap here. I just saw a house in Detroit sell on Ebay for $2000.

Think of all the extra ammo you can buy with the savings!
14:29 January 14, 2011 by kenny8076
Swedesmith atleast on America you have the option to protect yourself...... if more people had guns things like Virginia tech and arizona wouldnt have happened............ in sweden if you own a gun and someone attacks you you cant use it......... people in Mälmo, stockholm and Gothenburg are feeling that rath............. you will NEVER get rid of guns from criminals..... so why dont people like you and me have the right to own one and protect ourselves? People kill people not guns. i owned a glock in America for 5 years, had it next to my bed, i never used it, but had someone broke into my house they would have been in some trouble

Look at the guy in China a couple years ago that killed 20+ people with a knife, in malls, on the streets ect ect...... shall we ban knives too?
17:20 January 14, 2011 by mojofat
I love how the answer to gun violence is...wait for it...more guns! Makes perfect sense. You know kenny, there is another way to look at it; which is, if guns were harder to get (especially for the mentally ill) then things like virginia tech and arizona would be much rarer than they are. But no, instead the US has an NRA that fetishizes guns and violence and blocks any little bit of regulation. Even something as common sense as the assault weapon ban.

And besides, it's people with guns kill people. Period.
Today's headlines
Sweden wants cruise missiles 'for defence'
Defence Minister Karin Enström. File photo: TT

Sweden wants cruise missiles 'for defence'

The Swedish government has announced plans to beef up its defence forces by fitting its fleet of Gripen fighter jets with long-range cruise missiles. READ () »

Swede of the Week
Sweden's oldest would-be MP: 'They promised I wouldn't get in'
Swedes vote in the 2010 elections. File photo: Dan Hansson/TT

Sweden's oldest would-be MP: 'They promised I wouldn't get in'

Gösta Arvedson, 89, is the oldest Riksdag candidate in Sweden, but our Swede of the Week explains that the Liberal Party (Folkpartiet) had to make some unusual promises for him to put his name forward. READ () »

Elections 2014
Most Swedes lack info ahead of EU vote
The Green Party is one of only two parties devoting their websites to the EU elections. Here campaign manager Emma Rung presents the party's posters. Photo: Leif R Jansson/TT

Most Swedes lack info ahead of EU vote

The majority of Swedes feel the country's political parties are not doing enough to inform them about the upcoming European Parliament elections. Only two of the eight parties have dedicated their homepages to the May 25th polls. READ () »

Fatal Norrköping Brawl
Local church tried to stop Norrköping murders
Swedish police on the scene following Monday's fatal brawl. File: TT

Local church tried to stop Norrköping murders

The Syrian-Orthodox Church in Ektorp had tried to quell tensions between two rival families just hours before bad blood spilled into a massive brawl and two brothers lost their lives. READ () »

JobTalk Sweden
'Foreigners don't need to show banks Swedish ID'
The bridge that connects Sweden to the European continent. File: L.E. Daniel Larsson/Flickr

'Foreigners don't need to show banks Swedish ID'

The Swedish agency that helps Europeans fight impediments to the EU principle of free movement has revealed an increase in complaints, including one from a foreign citizen unable to open a bank account in Sweden. READ () »

Eurovision 2014
Pig heart shatters in Sweden's Eurovision clip
Sanna Nielsen in the new clip. Photo: YouTube (screenshot)

Pig heart shatters in Sweden's Eurovision clip

Sweden's Eurovision hopeful Sanna Nielsen released the official video for the song Undo on Wednesday, a clip featuring leather, slow motion destruction, and a frozen pig's heart and some violence. READ () »

Software robot pinches Swedish flats in seconds
Swedish apartments. File: The Local

Software robot pinches Swedish flats in seconds

A Swedish landlord suspects that a property fixer has set up a software robot to sign up for new flats on the market within seconds, and is charging house hunters to use the service. READ () »

Swedish zoo fire 'kills only the spiders'
Photo: Johan Nilsson/TT

Swedish zoo fire 'kills only the spiders'

Twenty-five fire fighters were on hand on Wednesday night when a fire broke out in a southern Sweden animal park. The vast majority of the animals were unharmed, but the cluster of spiders wasn't so lucky. READ () »

Sweden Investor group posts sharp profit drop
File photo: Simon Cunningham/Flickr

Sweden Investor group posts sharp profit drop

Swedish investment giant Investor on Wednesday said its first-quarter profits slumped by a quarter, underlining Sweden's vulnerability to international instability. READ () »

Florida 'mystery knight' dies in Sweden
Michael Boatwright (R) and Medieval knight re-enactors.

Florida 'mystery knight' dies in Sweden

The "motel mystery" American who baffled US authorities by only speaking Swedish when he woke up from a coma last year has passed away, Swedish media reported on Wednesday. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
finest.se
Gallery
People-watching April 23
TT
Gallery
Inside the 850-year-old king's coffin
Features
Sponsored: South-eastern Sweden offers Öland beaches and more
Gallery
Swedish underwear shop puts staff in front of the camera
Gallery
IN PICTURES: The Local's Property of the Week - Täby
Sponsored: India+Sweden Week - India Unlimited
Features
Sponsored: India+Sweden Week - A film, food, and finance feast
National
University applications rocket to record high
finest.se
Gallery
People-watching April 18-20
TT
Society
Kids in Victorian garb mark Swedish Easter
Shutterstock
National
Swedish MP ordered chemtrail probe
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
Advertisement:
finest.se
Gallery
People-watching April 16
Politics
Who's the prime minister's heir?
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Private
National
Flash mobs hug it out across Sweden
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

720
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com