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These are the products that have got cheaper (and more expensive) in Sweden

The coronavirus crisis has led to falling prices in Sweden, across a whole range of categories – but food is getting more expensive.

These are the products that have got cheaper (and more expensive) in Sweden
Fruits and vegetables have got more expensive, but a sharp fall in energy prices led to negative inflation in April. Photo: Hasse Holmberg/TT

The pandemic has had a major effect on the economy, with numerous companies forced to declare bankruptcy, hundreds of thousands of workers sent home from their jobs, and unemployment expected to rise.

At the same time, prices are falling, with inflation at a minus rate. According to Statistics Sweden, the rate of inflation, measured using the change in the fixed-rate consumer price index (CPIF), was -0.4 percent in April, compared to 0.6 percent in March.

Lower electricity and fuel prices had the biggest impact, falling by 16 and 21 percent respectively year-on-year, and by 5.1 and 9 percent respectively compared to the previous month. Excluding energy, the total inflation rate was 1 percent, so this category was responsible for the minus figure.

Electricity prices were already low in early 2020, due to a mild winter combined with a long period of a lot of precipitation and relatively windy weather, which left reservoirs full while helping to reduce domestic electricity use. In other words, that meant high supply and low demand.

Prices have also fallen for products in the retail and entertainment sectors, which have been hard hit by the crisis. 

Clothing prices were down by 2.1 percent in April from the previous month according to the CPIF and by 3.8 percent from last year, while recreational and cultural services had fallen by 2.5 percent month-on-month and by 1.6 percent over the past year.

But when it comes to food, prices have risen and were up by one percent month-on-month and by 3.5 percent compared to last year.

This is likely due in part to increased sales in the early stages of the outbreak as people stocked up on key food items. 

Fruit and vegetables have become a lot more expensive, rising in price by nine and five percent respectively. And hot, caffeinated drinks are clearly in demand, with coffee, tea and cocoa rising by close to seven percent in the space of one year. 

“The corona pandemic affects society in many ways. Among other things, it has led to Swedish consumers switching large parts of their consumption. In some cases, stores have been closed and products purchased in other ways. In other cases, consumption has completely stopped,” Statistics Sweden said.

“Due to non-consumption, the price trend for flights, tickets for sports competitions, cinema, theatre and entertainment has been imputed so that they do not affect the rate of inflation.”

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EUROPEAN UNION

Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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