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Inflation in Sweden hits highest level for 30 years

Inflation in Sweden hit 6.1 percent in March, the highest rate seen in the country in more than 30 years, Sweden's state statistics bureau has reported.

Inflation in Sweden hits highest level for 30 years
A woman shops in Stockholm. Photo: Anders Wiklund/TT

According to the latest report from Statistics Sweden, consumer price inflation hit 6.1 percent in March, higher than any year since 1991, when inflation reached 7.8 percent. 

“The rate of inflation has taken a big leap as a result of a general, broad-based increase in prices,” said Caroline Neander, a statistician at the agency. “The price of groceries and alcohol-free drinks increased, but more than anything else it was rising prices of electricity and fuel which had an impact.” 

Annika Winsth, chief economist at Sweden’s Nordea bank, said that she expected Sweden’s central bank, the Riksbank, to respond to the rapidly growing prices by increasing interest rates in the first half of this year. She said that households in Sweden should be prepared for further price rises. 

“Now inflation is rising across the board and the risk is that we’re going to see even higher numbers in April, so it’s something you need to watch out for as a household or business.” 

The inflation figures were higher than most analysts had predicted, beating even SEB’s bearish prediction of 6 percent.

“Our prognosis was already a bit above the consensus, but it was a little higher than expected even when compared to what we believed,” said Jens Magnusson, SEB’s chief economist. 

Listen to a discussion on Sweden’s rising cost of living on Sweden in Focus, The Local’s podcast. 

Click HERE to listen to Sweden in Focus on Apple Podcasts, Spotify or Google Podcasts.

The electricity price is up 34 percent on March last year, and the price of fuel is up 46.8 percent. Groceries are on average up 5.8 percent, and dairy products are up 6.8 percent. 

Magnusson said that current high inflation was underpinned with shortages of certain metals and raw materials, more expensive transport costs, and disruptions in the global supply chain. 

“It kicked off in the autumn with rising energy prices, and then everything deteriorated further a bit when the war in Ukraine broke out,” he says.  

SEB believes that the Riksbank will keep interest rates stable at its April meeting, but Magnusson said the high figures could push it to start rising rates earlier. 

“The question is whether they are going to start the rise as early as the next meeting in April, or whether they are going to wait and raise rates in June,” she said. “One thing you can be sure of is that we’re going to see rates rise in the first half of the year.” 

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BUSINESS

Philip Morris offers $16 bn for Swedish smokeless tobacco firm

Marlboro-maker Philip Morris International said on Wednesday that it had offered $16 billion to acquire smokeless tobacco company Swedish Match as the US group aims to move away from its traditional cigarette business.

Philip Morris offers $16 bn for Swedish smokeless tobacco firm

The board of Swedish Match recommended that its shareholders accept the bid of 106 Swedish kronor per share, nearly 40 percent above its closing share price on Monday, the companies said in separate statements.

The deal would total 161.2 billion Swedish kronor (15 billion euros).

Stockholm-based Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zyn brand of nicotine pouches.

Philip Morris announced in 2016 a long-term goal to stop selling cigarettes and replace them with alternatives that it says are less harmful.

The US company sells cigarette brands such as Marlboro and Chesterfield in 180 markets outside the United States and has invested billions of dollars since 2008 in vapor products, oral nicotine and other “reduced-risk” products.

Last year it clinched a controversial takeover of British breathing inhaler manufacturer Vectura, despite fierce opposition from health campaigners and medical groups.

The group plans to generate at least $1 billion in annual net revenues from nicotine-free products by 2025.

Philip Morris and Swedish Match had confirmed the takeover talks on Monday following a Wall Street Journal report.

“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” the US company’s chief executive, Jacek Olczak, said in a statement.

“Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion — strengthened by complementary geographic footprints, commercial capabilities and product portfolios — and open up significant platforms for growth in the US and internationally,” he said.

Swedish Match chairman Conny Karlsson told AFP that the deal was a “good offer” for shareholders.

“It’s great to have the chance to broaden the distribution of our products, which can compete with cigarettes,” Karlsson said.

Snus scandal

Swedish Match is also known for making cigars and “snus”, a form of snuff particular to Nordic countries.

The sale of snus, a moist powder tobacco originating from dry snuff, is illegal across the European Union, but Sweden has an exemption. It contains nicotine and comes in teabag-like pouches that are placed under the lip.

In 2012, Swedish Match said an associate to the EU’s then health commissioner had sought a 60-million-euro payment from the company to push for a proposed tobacco law that would lift the snus ban.

The firm filed a complaint with the European Anti-Fraud Office and the health commissioner, John Dalli, resigned from his post.

Dalli appeared in a Maltese court this year on charges of bribery and trading in influence over the lobbying scandal.

Swedish Match shares rose by almost nine percent to 103.50 kroner following the takeover bid.

Philip Morris, listed on the New York Stock Exchange, was up 0.6 percent to $99.47 in electronic trading before the stock market opened.

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