• Sweden's news in English

Housing costs cause Swedish inflation spike

TT/The Local/vt · 13 Jan 2011, 12:12

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

Facebook Twitter Google+ reddit

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.

Story continues below…

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)

Facebook Twitter Google+ reddit

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

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: Russian warships in the Baltic 'worrying'
Swedish Defence Minister Peter Hultqvist. Photo: Vilhelm Stokstad/TT

Two Russian warships equipped with long-range missiles have entered the Baltic Sea after passing Denmark.

Why businesses are worried about Sweden's drone ban
A drone filming in Stockholm. Photo: Pontus Lundahl/TT

The Local investigates what Sweden's new drone ban could mean for businesses in the country.

This is the new top boss of Swedish Ericsson
Börje Ekholm. Photo: Magnus Hjalmarson Neideman/SvD/TT

Telecoms giant Ericsson has appointed a new CEO after a turbulent year for the company.

These are Sweden's best universities: ranking
A new university ranking has been released. Photo: Cecilia Larsson Lantz/Imagebank.sweden.se

At least according to this global ranking, which picks 12 Swedish universities among the top-1000.

Swedish pharmacies restrict paracetamol sales for teens
The move is intended to cut paracetamol overdoses. Photo: Nora Lorek/TT

Sweden's pharmacies are banning teens under 18 from buying more than one pack of pills at a time.

The Local List
12 Swedish words with just awesome literal translations
A filthy-minded lobster, i.e. a snuskhummer. Photo: Gorm Kallestad/NTB scanpix/TT

One of our favourite things about the Swedish language is its wonderful compound words, which range from being utterly bizarre to making perfect sense.

Rwandan genocide suspect held in Sweden
A memorial centre in Kigali, Rwanda. Photo: Ben Curtis/AP

A man has been arrested in Sweden suspected of involvement in the 1994 Rwandan genocide which claimed 800,000 lives.

Sweden can extend border controls, EU says
A police officer carrying out a check at Sweden's border with Denmark. Photo: Emil Langvad/TT

EU countries including Sweden should be granted permission to extend temporary border controls by a period of a further three months, the European Commission has decided.

Nobel Prizes
'I'd say he's arrogant but I'd be lying': Swedes on Bob Dylan
Bob Dylan performing in France. Photo: David Vincent/AP

Almost two weeks have passed since Bob Dylan was awarded the Nobel Prize in Literature and he has yet to acknowledge the win. The Local asked Swedes what they think of the singer's silence.

Sweden cuts 2016 refugee forecast by thousands
A Swedish migration authority office in Stockholm. Photo: Maja Suslin/TT

The country has also slashed its prediction for 2017.

Sponsored Article
Stockholm: creating solutions to global challenges
Property of the week: Kungsholmen, Stockholm
Sponsored Article
Last chance to vote absentee in the US elections
Will Swedes soon be looking for fairtrade porn?
The Local Voices
'I simply don’t believe in nationality'
Blog updates

6 October

10 useful hjälpverb (The Swedish Teacher) »

"Hej! I think the so-called “hjalpverb” (auxiliary verbs in English) are a good way to get…" READ »


8 July

Editor’s blog, July 8th (The Local Sweden) »

"Hej readers, It has, as always, been a bizarre, serious and hilarious week in Sweden. You…" READ »

Sponsored Article
This is Malmö: Football capital of Sweden
Why we're convinced Game of Thrones is based on Sweden
Sponsored Article
Where is the Swedish music industry heading?
People-watching: October 21st-23rd
Fury at plans that 'threaten the IB's survival' in Sweden
Analysis & Opinion
Are we just going to let half the country die?
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Angry elk chases Swede up a lamp post
Sponsored Article
Swedish for programmers: 'It changed my life'
The Local Voices
'Alienation in Sweden feels better: I find myself a stranger among scores of aliens'
People-watching: October 20th
Sponsored Article
Top 7 tips to help you learn Swedish
The Local Voices
A layover at Qatar airport brought this Swedish-Kenyan couple together - now they're heading for marriage
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
Swede punches clown that scared his grandmother
Fans throw flares and enter pitch in Swedish football riot
Sponsored Article
Stockholm: creating solutions to global challenges
Could Swedish blood test solve 'Making a Murderer'?
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Property of the week: Linnéstaden, Gothenburg
Sponsored Article
Where is the Swedish music industry heading?
Swedish school to build gender neutral changing room
Sponsored Article
One expat's strategy for making friends in Stockholm
People-watching: October 14th-16th
Sponsored Article
Nordic fashion in focus at Stockholm University
Man in Sweden assaulted by clowns with broken bottle
Nobel Prize 2016: Literature
Watch the man who discovered Bob Dylan react to his Nobel Prize win
Record numbers emigrating from Sweden
People-watching: October 12th
The Local Voices
'Swedish startups should embrace newcomers' talents - there's nothing to fear'
How far right are the Sweden Democrats?
Property of the week: Triangeln, Malmö
Sweden unveils Europe's first elk hut
The Local Voices
Syria's White Helmets: The Nobel Peace Prize would have meant a lot, but pulling a child from rubble is the greatest reward
jobs available