Swedish statistics agency published faulty inflation data

Sweden’s central bank was relying on bad inflation data when it decided to raise interest rates last week, Statistics Sweden has revealed.

According to the agency, it has been miscalculating the estimated price changes for shoes since the start of the year.

“The previously published inflation rates for April through July have therefore been somewhat misleading,” the agency said in a statement.

Statistics Sweden revised July inflation to 4.1 percent, down from the previously published level of 4.4 percent which had been the highest inflation rate recorded in Sweden in 15 years.

Meanwhile, the agency reported that inflation for August was 4.3 percent, up 0.2 percent from the revised figures for July.

The mistake had analysts wondering whether the Riksbank may have acted differently last week if the correct inflation figures had been known.

“It’s interesting against the background that [Riksbank head] Stefan Ingves in a number of interviews singled out the fact that inflation is too high today,” said Henrik Mitelman, head analyst at SEB bank, to the TT news agency.

However, Mitelman stopped short of declaring unequivocally that the revised data would have resulted in the Riksbank leaving rates untouched.

“Ah, it’s hard to say. But it would have been a piece of the puzzle and it would have ended up on the other side of the balance,” he said.

But former Riksbank vice-chair Villy Bergström doesn’t think the interest rate decision would have been different.

“I don’t think that a few tenths of a percent changes the analysis very much, especially when the trend is still that inflation is being pushed up. They are naturally frightened for dispersion effects and those risks still exist,” said Bergström to TT.

In explaining the August price increases, Statistics Sweden said the main driver were higher prices for clothing, which went up 6.9 percent. While prices on electricity, furniture, and mortgage interest also went up, their overall effects were mitigated by lower prices for fuel (down 4.1 percent), vegetables (down 5.5 percent) and package holidays (down 7.4 percent).