• Sweden's news in English

Swedish inflation advances in January

TT/The Local/vt · 17 Feb 2011, 14:48

Published: 17 Feb 2011 14:48 GMT+01:00

Facebook Twitter Google+ reddit

Consumer prices fell by 0.7 percent from December to January. However, the inflation rate rose from 2.3 percent in December to 2.5 percent in January, according to Statistics Sweden.

The inflation rate represents the average change in consumer prices in the last 12 months.

The underlying inflation rate, according to the CPI with a fixed interest rate (CPIF) and CPI excluding mortgage costs (CPIX), was 1.4 precent and 1.1 percent respectively in January and lower than expected.

"It's a big surprise, it's a whole 6 percentage points below the Riksbank's CPIF forecast," said Olle Holmgren, an analyst with the SEB bank, to the TT news agency.

Analysts had on average expected an annual rate of 2 percent, according to a Reuters poll. The actual rate of inflation was in line with expectations.

Higher housing costs of 1.9 percentage points contributed to the rise in the inflation rate. Higher interest expenses were also a factor, up 1.3 percentage points, as well as electricity prices, up 0.3 percentage points and higher rents, up 0.2 percentage points.

In terms of transportation, higher fuel prices contributed to pushing the inflation rate up 0.3 percentage points, while lower prices for international air travel led to a 0.1 percentage point drop in January.

Underlying inflation and especially the CPIF measure were significantly lower than expected.

"That's what's most important for setting monetary policy," said Holmgren.

"It can be explained by the fact that there have been more discount sales than expected, food prices rose less than expected, while travel fell more than expected."

He said that although there is a large discrepancy from analyst forecasts for a single month, January is a difficult month to assess.

"It is likely that one may have to downwardly revise a part of the CPIF forecast. Our forecast was good. Even before today's figure, the CPIF was slightly below the Riksbank's forecast in the short term and we will probably have to downwardly revise our forecast as well," said Holmgren.

The Riksbank's view is that a broader increase in inflation will come a bit later in the future. It is also chiefly in rapidly rising growth and resource utilisation, which risks leading to inflation in the long term, that drives the Riksbank's interest rate hikes.

Story continues below…

"On the margin, the price pressure even at this stage affects the mood a little. Such low figures can affect the outlook for interest rate hikes this year," said Holmgren.

He believes that it is still most likely that the Riksbank will maintain its interest rate path and steadily raise rates throughout the year.

However, Thursday's inflation announcement has resulted in a "downside risk" in the interest rate path, slightly reducing the likelihood of further interest rate increases.

TT/The Local/vt (news@thelocal.se)

Facebook Twitter Google+ reddit

Your comments about this article

16:42 February 17, 2011 by UScitizen
I'm making a comment here about the Al-Qaeda story since we're apparently forbidden to make comments there. So Sweden tries to be the savior of the world, bringing in all these refugees, giving them homes, medical care, everything they need for a decent life, all for free and this is the thanks Sweden gets? Threats of more violence and a call for terriorists to attack Sweden?

First thing the government should do is STOP allowing any muslim or middle eastern people to come into the country, even to visit. Second, start deporting all of those already here. I hate to say that but how can you look at a group of people and tell which are bad and which aren't? The only protection is blanket protection.

Sweden, stop trying to save a little part of the world. The world knows you're a good country that cares for others but it's time to care for your own citizens and protect your borders. It's now or never. Comments, anyone?
Today's headlines
Here's how slow Sweden's high-speed trains are getting
A Swedish SJX2000 high speed train. Photo: Tomas Oneborg/SvD/TT

The high-speed rail journey between the three biggest Swedish cities is about to get longer.

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.

US election
Donald Trump won't get new Ericsson head's vote
Trump pictured at a campaign rally in Florida. Photo: Evan Vucci/AP

The new Swedish-American boss of telecoms giant Ericsson has revealed he will not vote for the Republican nominee in the forthcoming US presidential election.

Swedes named fourth most gender equal in the world
A file photo of men and women pushing prams in Stockholm. Photo: Claudio Bresciani/TT

Sweden has closed 81 percent of its overall gender gap according to the World Economic Forum.

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.

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.

Sponsored Article
Stockholm: creating solutions to global challenges
Sweden cuts 2016 refugee forecast
Sponsored Article
Last chance to vote absentee in the US elections
Is Game of Thrones coming to Sweden?
Property of the week: Kungsholmen, Stockholm
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
Will Swedes soon be looking for fairtrade porn?
Sponsored Article
Where is the Swedish music industry heading?
The Local Voices
'I simply don’t believe in nationality'
Why we're convinced Game of Thrones is based on Sweden
People-watching: October 21st-23rd
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fury at plans that 'threaten the IB's survival' in Sweden
Sponsored Article
Swedish for programmers: 'It changed my life'
Analysis & Opinion
Are we just going to let half the country die?
Angry elk chases Swede up a lamp post
Sponsored Article
Top 7 tips to help you learn Swedish
The Local Voices
'Alienation in Sweden feels better: I find myself a stranger among scores of aliens'
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
People-watching: October 20th
The Local Voices
A layover at Qatar airport brought this Swedish-Kenyan couple together - now they're heading for marriage
Sponsored Article
Stockholm: creating solutions to global challenges
Swede punches clown that scared his grandmother
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fans throw flares and enter pitch in Swedish football riot
Sponsored Article
Where is the Swedish music industry heading?
Could Swedish blood test solve 'Making a Murderer'?
Sponsored Article
One expat's strategy for making friends in Stockholm
Swedish school to build gender neutral changing room
Sponsored Article
Nordic fashion in focus at Stockholm University
People-watching: October 14th-16th
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
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