Sweden's inflation rate has increased from 2.8% to 3% in July, driven by higher prices in package holidays, car rentals, and food items like soda and chocolate. The Riksbank is expected to hold off on interest rate cuts, despite hopes for a decline in inflation towards autumn.
Rising Inflation in Sweden: SCB Reports New Figures
Rising Inflation in Sweden: SCB Reports New Figures
Inflation is on the rise, according to new figures from SCB. It increased from 2.8% to 3% in July, as measured by the KPIF index. Package holidays, soda, and chocolate are highlighted as some of the items that have become more expensive.
– Higher prices in package holidays, car rentals, and food were the main contributors to the overall price increase from June to July, says Mikael Nordin, price statistician at SCB in a press release.
Package holidays are singled out as the primary reason for the accelerating inflation rate in July. The price of such trips rose by over 16%.
Food prices increased by 1.1%, with treats like soda and chocolate becoming particularly more expensive.
KPIF is a measure that describes inflation when the effects of mortgage rates are excluded. However, even according to the KPI measure, which includes all household expenses, inflation rose slightly. There, the change was smaller, with inflation rising from 0.7% in June to 0.8% in July.
Expert Opinion: No Interest Rate Cut Expected
The Riksbank's inflation target is 2.0%. Next week, a new announcement on the interest rate, currently at 2.0%, is expected. Today's inflation report likely means the Riksbank will hold off on another cut, believes Frida Bratt, savings economist at Nordnet.
"There are partly 'holiday effects' behind the inflation increase in July. Perhaps the Riksbank can dare to hope for a declining inflation rate towards autumn. But I don't think they can fully relax yet; the Riksbank will want clear evidence that inflation is not persisting before lowering the rate. Therefore, there will be no cut at next week's rate meeting, but possibly in September," she writes.
In Line with Previous Announcements
Last week, preliminary figures showed the same trend. It was already expected that inflation would rise slightly, according to several experts.
However, the continuous rise during the summer months does not necessarily mean it will continue, argued Avanza's private economist Felicia Schön.
"I see no reason to worry about a persistently rising inflation. On the contrary, much points to a declining inflation – lower electricity prices, lower fuel costs, more clarity in the tariff conflict, diminishing lag effects, and above all, consumers have no more to give," she writes.