Sweden’s underlying inflation slowed more than expected from a three-decade high, bringing some relief to the Nordic nation’s households and its central bank, which has been under pressure to raise borrowing costs.
(Bloomberg) — Sweden’s underlying inflation slowed more than expected from a three-decade high, bringing some relief to the Nordic nation’s households and its central bank, which has been under pressure to raise borrowing costs.
A price measure that strips out energy costs and the effect of interest-rate changes rose 8.9% from a year ago in March, according to Statistics Sweden. That was lower than the 9.1% projected by economists and marks the first slowdown in 15 months, even though the level exceeds the central bank’s estimate of a 7.5% rise.
The reading comes after a string of inflation data that has wrong-footed the world’s oldest central bank since the autumn of 2021. The Riksbank has said it expects to raise the key rate from 3% when the executive board gathers on April 25.
Policy makers are facing a delicate balancing act as further rate hikes will add to the burden of households that are already feeling the pain of increased borrowing costs and food prices rising at the fastest rate since the 1950s. The tightening is also weighing on economic output, with Sweden set to experience the worst contraction in the European Union this year, according to OECD forecasts.
Riksbank Governor Erik Thedeen has said that data published ahead of the April meeting is “more important than ever” for determining its course of action. Swedish long-term inflation expectations by money market players rose slightly in the latest Prospera survey published on Thursday, also providing input for the decision.
While the central bank has lately focused more on underlying price growth, the CPIF inflation rate, which includes energy prices, was also lower than economists’ forecast, at 8%.
–With assistance from Ainhoa Goyeneche and Joel Rinneby.
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