• 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
Police seeking missing Swede in London
Sofie Marie Jansson, who is currently missing in London. Photo: Metropolitan Police

Police seeking missing Swede in London

British police have issued a plea for tips in the search to find Swedish national Sofie Marie Jansson who hasn't been seen for almost a week. READ () »

University applications rocket to record high

University applications rocket to record high

Swedish universities continue to draw vast amounts of applicants with the number of prospective students seeking a third level education increasing for the seventh year in a row. READ () »

Man jailed in US over Lars Vilks murder plot
Swedish artist Lars Vilks pictured in New York in 2012. Photo: Linus Sundahl-Djerf/TT

Man jailed in US over Lars Vilks murder plot

American authorities have sentenced a 20-year-old accomplice of 'Jihad Jane' to five years in prison for an attempted terror plot to kill Swedish artist Lars Vilks, after getting involved with the murder plans when he was a teenager. READ () »

Sweden scraps 'new start zones' after EU input
Integration Minister Erik Ullenhag visits a school in Tensta, one of the neighbourhoods mentioned when he and his colleagues first floated the new start zone proposal. File: TT

Sweden scraps 'new start zones' after EU input

Sweden has abandoned a plan to ease taxes for small companies in blighted areas after the European Commission challenged its legality. READ () »

'Easter eggs an invitation to spread germs'
A typical Swedish Easter egg. Photo: Jessica Gow/TT

'Easter eggs an invitation to spread germs'

A Swedish microbiologist has warned that traditional Swedish Easter eggs laden with candy are an open invitation to the spread of bacteria and viruses. "Is this really a good idea?" he asked. READ () »

Jammed truck snarls Stockholm rush hour
Photo: Anders Wiklund/TT

Jammed truck snarls Stockholm rush hour

PICTURES: A truck got wedged inside a tunnel in central Stockholm on Thursday, with authorities concerned the accident may have damaged cables in the tunnel's ceiling. READ () »

Kids in Victorian garb mark Swedish Easter
A Swedish Easter witch holding daffodils. File photo: TT

Kids in Victorian garb mark Swedish Easter

In India, I'd notice Easter only from the traffic jam outside the churches, but here witches, egg hunts, and feathers mark the Christian holiday. The Local's Deepti Vashisht brings you the various shades of Swedish Easter. READ () »

Swedish MP ordered chemtrail probe
Chemtrails?: Shutterstock.

Swedish MP ordered chemtrail probe

A Swedish MP who launched an official government investigation into the existence of chemtrails tells The Local why he thinks Swedes deserve the truth, even if it may leave some conspiracy theorists unsatisfied. READ () »

PM pleads ignorance of Vattenfall's Nuon bid
Fredrik Reinfeldt answers the constitutional affairs committee's questions. Photo: TT

PM pleads ignorance of Vattenfall's Nuon bid

Sweden's prime minister on Thursday said Vattenfall itself, not its owners the Swedish state, had responsibility for the loss-making Nuon deal. READ () »

'Kockums submarine raid may be illegal': lawyer
Photo: TT

'Kockums submarine raid may be illegal': lawyer

A Swedish lawyer says the Swedish military may have broken the law when it raided the Malmö premises of German defence giant Thyssen Krupp. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
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
Advertisement:
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
TT
Politics
Swedes to give six-hour workday a go
TT
Society
Aussie choir member wows Abba in Sweden
YouTube
Society
Stockholm magic a surprise YouTube hit
Fastighetsbyrån
Society
Gallery: The Local's Property of the Week
Private
Society
Swedes find 200-year-old gravestone in living room
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Deepti Vashisht
Features
Deepti Vashisht dissects the magic of Sweden's personal ID number
Shutterstock
Society
Ten signs you've been in Sweden too long
Society
Jimi Fritze heard every word when doctors discussed taking his organs
Society
A Swedish farmer explains why the new bestiality ban is 'pointless'
ESL
Sponsored Article
Learning Swedish the easy way
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 »

771
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