Sweden to give out 14 billion kronor in fuel and power subsidies

Sweden announced plans on Monday for a 14 billion kronor (€1.32-billion) subsidy package to help Swedes cope with soaring prices resulting from Russia's invasion of Ukraine on the heels of winter's sky-high energy prices.

Swedish Finance Minister Mikael Damberg announcing the subsidy package on Monday.
Swedish Finance Minister Mikael Damberg announcing the subsidy package on Monday. Photo: Christine Olsson/TT

The proposed subsidies include a temporary reduction of petrol and diesel taxes, a one-time minimum payout of 1,000 kronor ($104, 95 euros) to car owners, a one-month extension through March of a winter electricity subsidy for homeowners in central and southern Sweden, and a temporary increase in housing subsidies for the poorest families.

Sweden has among the highest prices in the world for fuel due largely to its high taxes, at around 21 kronor ($2.20, 1.99 euros) per litre for petrol and 25 kronor for diesel.

If approved by parliament, the measures would come into effect on June 1.

“We are today presenting an exceptional package of measures to counter the price increases we are now seeing as a result of Russia’s invasion,” Finance Minister Mikael Damberg said in a statement.

“The situation is still uncertain and prices are very volatile, but we can see that we need to support consumers in this acute stage and at the same time take measures to reduce our fossil fuel dependency.”

Prices in February were up by 4.5 percent from a year earlier, Statistics Sweden said on Monday, the highest level since 1993 when the country was in deep economic crisis.

Electricity was 14 percent higher than a year ago, while food prices rose by 3.6 percent and clothes by five percent.

Analysts noted that those increases in February did not include the effects of Russia’s invasion — which began on February 24 — and predicted further hikes to come.

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Sweden facing ‘the highest inflation in 30 years’

Sweden last month saw the highest levels of inflation in more than 30 years, according to the latest figures from Statistics Sweden.

Sweden facing 'the highest inflation in 30 years'

Consumer prices rose 6.4 percent in April, the agency reported in its latest monthly figures, well ahead of the 6.1 percent rise predicted by analysts and up from 6.1 percent in March. 

“This shows high inflationary pressure. It’s in line with consensus, but it’s 0.2 percentage points higher than what the Riksbank has been predicting,” said Olle Holmgren, an economist with SEB. 

Rising prices of meat, vegetables and other groceries were the main reasons for the rise, with the prices of electricity and fuel falling month-on-month. If energy prices are excluded, inflation was 4.5 percent in April, up from 4.1 percent in March. 

“Restaurant prices are rise quite a bit for the second month in a row. That can be linked to grocery prices,” Holmgren said. “Then there are higher prices generally, but grocery prices are increasing rapidly.”

Holmgren predicted that the inflation rate could continue to rise in the coming months, increasing the risk that Sweden’s public bank, the Riksbank, will hike interest by 0.5 percentage points — two slots — in September. 

Fuel prices fell in April compared to March, although diesel remains 56.7 percent higher than a year ago and petrol 36 percent higher. 

The price coffee is higher now than at any time since it joined the consumer price index in 1983, after rising 29 percent so far this year. 

Other groceries which have risen significantly in price this year are cabbage and tomatoes, which rose in price by 43 percent ad 33 percent respectively. 

The price of avocado has fallen by 14 percent this year, while pickled herring has fallen in price by 16 percent.