Clear decrease in inflation in Sweden

“The anti-inflation measures are producing results. We’re seeing a clear decrease in inflation both in Sweden and internationally. But Sweden’s economic situation remains difficult, with weak growth and low demand for labour. Lower inflation increases the Government’s scope for action, but it’s important to remain prepared for the fact that inflation may rise again,” says Minister for Finance Elisabeth Svantesson.

Energy prices are now helping to slow inflation. This is because electricity prices are lower than they were a year ago, while fuel prices are also lower since the Government lowered the reduction obligation and fuel taxes. Core inflation has also fallen but remains elevated primarily due to the rising cost of services. Nonetheless, inflation is expected to continue to fall both in Sweden and internationally, and Sweden is expected to meet its inflation target this year.

Activity in the Swedish economy has been subdued for some time, and interest rate-sensitive parts of the economy such as household consumption and housing investment have hampered GDP growth. Although growth is expected to increase somewhat this year, the economy is still deemed to be in recession. Overall, the Ministry of Finance expects Sweden’s GDP to increase by 0.7 per cent this year and by 2.5 per cent in 2025. Developments in the Swedish economy are largely in line with the situation outlined in the December forecast.

“Our assessment is that the recession will continue into 2025,” says Minister for Finance Elisabeth Svantesson.

Demand for labour is low in the Swedish labour market, and the number of companies going bankrupt has increased clearly. Due to weak demand, employment rates have decreased and are expected to continue to do so throughout 2024. This contributes to rising unemployment, which is expected to continue throughout 2024 and reach 8.3 per cent. The situation in the labour market will remain subdued and is expected to lead to high unemployment in 2025 as well.