Sweden's inflation rate rose to 3.3% in August, surpassing expectations and potentially influencing future interest rate decisions. While core inflation has decreased, experts like Nordnet's Frida Bratt suggest that the Riksbank may struggle to lower rates under current conditions. The final inflation figures, due on September 11, will provide more insight into price increases, particularly in food, which could be crucial for the Riksbank's upcoming decisions.
Rising Inflation in Sweden Could Impact Interest Rates
Rising Inflation in Sweden Could Impact Interest Rates
Inflation in Sweden rose to 3.3% in August, according to new figures from SCB. This was higher than expected and could be decisive for future interest rate developments.
Swedish inflation continues to be high. In August, inflation rose to 3.3% according to KPIF, which is the inflation rate excluding the effect of interest rates.
This continues a trend of high inflation that has persisted over the summer. In July, prices increased by 3%. The month before, the rate of price increase was 2.8%.
However, excluding energy, inflation fell slightly. The KPIF-XE measure, which tracks inflation without energy prices, dropped to 2.9% compared to 3.2% in July.
Financial Expert: Interest Rates May Not Be Cut
Nordnet's financial economist Frida Bratt believes today's figures mean there will be no interest rate cut, she writes in a comment.
"These are not pleasant figures in themselves, but it is noteworthy that core inflation is falling back more than expected from July. Given the sluggishness in the Swedish economy, there is a small hope for a cut in September. However, I personally believe the Riksbank will find it difficult to lower rates when inflation is at these levels."
Today's figures are a preliminary estimate, and the final figure will be presented on September 11. More detailed information on which types of goods have increased in price will also be available then.
Frida Bratt believes this could be crucial for how the Riksbank acts in the future.
"It will be extremely interesting to see if holiday effects are behind the inflation rate in August, or if it is actually a broader price increase, especially in food. This could be decisive for the Riksbank's upcoming decisions," says Nordnet's financial economist Frida Bratt in a comment.
"Tough Economy"
The Riksbank aims for inflation to be 2%. Their tool to try to regulate inflation is the interest rate, and if it is too high, it may mean the Riksbank needs to postpone the planned rate cut.
Avanza's Private Economist Felicia Schön does not believe inflation will be long-lasting.
"Demand in society is already weak after several years of a tough economy; there is simply no room in Swedes' wallets for price increases driven by demand," she writes and continues:
"The Riksbank needs to make a decision at the interest rate announcement at the end of September – do they choose to act on a slightly elevated inflation rate and leave the rate unchanged, or to stimulate the economy at large and cut the rate further? I hope for the latter, but unfortunately, I believe in the former."
Regular inflation figures will be available in a week.