Sweden's inflation rate rises for first time in two years

TT/The Local
TT/The Local - [email protected]
Sweden's inflation rate rises for first time in two years
Consumer prices rose more than expected in Sweden in January: Photo: Chris Anderson/TT

Sweden's month-on-month inflation rate rose in January for the first time in nearly two years, with consumer price inflation rising to 5.4 percent, according to new statistics released on Monday.


The consumer price inflation (KPI) rate was a full percentage point above the 4.4 percent reported in December, a change Statistics Sweden put down to rising interest rates on mortgages. The rise was also significantly above the 5.0 percent consensus of analysts surveyed by the Bloomberg news agency. 

"Housing costs increased in January and continue to be the greater contributor to the rate of inflation according to the KPI consumer price index," Mikael Nordin from Statistics Sweden said in a press statement

Rising spending on housing was offset by a sharp decline in the price of petrol and diesel as a result of the government's decision to reduce the amount of biofuels that needs to be blended in. 

Economists at Swedish banks said that the unexpectedly large rise in KPI inflation was unlikely to stop the Riskbank from reducing interest rates when it next makes an interest rate decision in May.

The Riksbank's 2 percent inflation target uses the KPIF measure of inflation, which strips out the impact of interest rates. KPIF inflation also rose to 3.3 percent in January, up from 2.3 percent in December and ahead of an analyst consensus of 3.1 percent.  


"This doesn't change the big picture for the Riksbank," said Nordea's chief analyst Susanne Spector, who said she was still expecting the central bank to cut the interest rate in May. 

Handelsbanken said it expected a rate cut in June, while Carl Nilsson, economist at Swedbank, said the January inflation figures were "comfortably in line with the Riksbank's own forecast". 

Nilsson, however, warned that the annual change in the constituents of the 'shopping basket' Statistics Sweden uses to analyse inflation may have hidden a larger real rise in inflation, suggesting that the reality could be less positive than it appears.


Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

See Also