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Inflation still a threat to Sweden's strong economy

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17:40 CEST+02:00
The Swedish economy remains strong, but rising food and oil prices may force the Riksbank to raise interest rates again next autumn.

The news comes as a disappointment for the country's mortgage holders, many of whom have flexible rates on their housing debt.

Despite the financial crisis and high inflation, most analysts are relatively optimistic about the Swedish economy.

Exports reached a record high in April and growth in the first quarter is expected to land around 3 percent.

Statistics Sweden's GDP numbers are due to be presented on Friday.

But in the last year run away oil and food prices have nearly doubled the rate of inflation.

In addition, inflation expectations have risen sharply during the spring, which puts further pressure on the Riksbank.

Rising oil prices are the main cause for concern. Food prices, which have risen 6.5 percent so far this year, are expected to increase by the same rate during the rest of the year.

Several mortgage lenders have raised their mortgage rates in recent days.

The explanation for the move is that the price of risk has risen sharply as a result of the financial crisis.

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