Inflation rate doubles in February

The inflation rate doubled in February to 1.2 percent on January's figure and the consumer price index climbed by 0.6 percent over the period, a new report from Statistics Sweden (SCB) shows.

According to an SCB statement, the main contributing factor behind the rise in February inflation was that interest costs did not contribute downward pressure as much as earlier. Rates remain lower than a year ago however and, adjusted for the direct effect of interest rate cuts, the February rate of inflation was 2.7 percent.

The Swedish consumer price index (CPI) increased by 0.6 percent from January to February. The CPI for February 2010 was 301.59 (1980=100).

Electricity price rises of 5 percent contributed 0.2 percentage points of the rise, while clothing (1.9 percent), furnishings and household goods (1.1 percent), transport (0.5 percent), and recreation and culture (0.6 percent), each pushed the index up 0.1 points.

The inflation rates according to CPIF and CPIX were 2.7 percent and 2.6 percent, respectively with both rates climbing 0.6 percent from January to February. The Harmonised Index of Consumer Prices (HICP) also increased by 0.6 percent from January 2010 to February of 2010 and has increased 2.8 percent since February of 2009.

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Sweden’s growth ‘better than expected’

Sweden’s gross domestic product grew 2.6 percent in the second quarter of 2014 compared to the same period a year earlier, with the economy performing much better than previously thought.

Sweden’s growth 'better than expected'
Strong household consumption is helping Sweden's growth. Photo: Mona-Lisa Djerf/SvD/TT

The second-quarter figures from Statistics Sweden (SCB) also showed GDP up 0.7 percent compared to the first quarter.

The news will come as a boost for the Prime Minister elect, Stefan Löfven, as the agency revised its preliminary figures for the quarter upwards by 0.7 percentage points.

Financial experts have expressed concern over the “fog of uncertainty” brought on by political instability in a hung parliament.

Sweden’s currency, the krona, took a small hit in the immediate aftermath of Sunday’s election.

Election puts Sweden in 'fog of uncertainty'

“To some extent SCB had expected an increase since the preliminary figures come out so early,” Mats Dillén, director-general of the National Institute of Economic Research (NIER), told The Local.

“But it is still better than they expected and, to be honest, it’s also somewhat stronger than we had anticipated.”

Mats Dillén said the strong growth was fuelled partly by levels of household consumption that were “very strong in a European perspective.”

Investments in the housing sector were also having a positive effect, he said.

The export sector however remained sluggish, due mainly to low demand in the eurozone.

NIER was sticking to its general prognosis for the year, Dillén said, with early third-quarter figures showing that Swedish exports and a eurozone recovery were both “standing still somewhat”.

For Stefan Löfven the figures will provide some welcome impetus as he seeks to form a government but Dillén said the autumn slump meant the finance ministry would not get over-excited.  

As for next year, “most observers expect there to be more growth allied with falling unemployment,” but OECD figures showing slow growth in the eurozone meant prospects remained “quite uncertain”, said Dillén.