Beyoncé keeps inflation high in Sweden, say economists – 06/14/2023 – Market

Central bankers looking for someone to blame for persistent price pressures have a new target: Beyonce.

Economists at Danske Bank (Danish bank) believe that the American singer’s decision to kick off her world tour in Stockholm in May has triggered a spike in local hotel prices, which in turn has driven Swedish inflation to beat expectations. .

Fans from around the world flocked to the Swedish capital for the two opening shows of Beyoncé’s “Renaissance” tour last month, with evidence suggesting that many of the 46,000 in attendance each night had to stay well away from the Swedish capital and for high prices.

The company Sweden Statistics reported on Wednesday (14) that the annual core inflation, which excludes changes in energy prices, fell just 0.2 percentage point between April and May, to 8.2%. It was a smaller margin than economists and the central bank had expected.

“Beyoncé is responsible for this month’s extra surprise. It’s really incredible for a single event. We’ve never seen this before,” said Michael Grahn, chief economist at Danske Bank in Sweden, who estimated that the singer contributed 0.2 point percentage for the increase.

Sweden Statistics said restaurants and hotels added 0.3 percentage points to the May figure, while recreation and culture contributed 0.2 points.

Economists said they expected the effects to wear off this month. But some, like Andreas Wallström, Swedbank’s head of forecasting, worry that Sweden’s next big show – Bruce Springsteen’s three nights in Gothenburg at the end of July – will have a similar effect.

Beyoncé – famous for hits like “Halo”, “Crazy in Love” and also “Bills, Bills, Bills” when she was part of Destiny’s Child – is on tour for the first time in seven years, generating huge demand for tickets in Europe and starting next month in the United States.

US websites were full of stories of Americans traveling to Sweden to take advantage of the weak Swedish krona and significantly cheaper fares than at home.

Tickets for the shows in Stockholm were sold for a face value equivalent to US$60-140 (R$290-670). For their Las Vegas shows, Ticketmaster prices for the standard ticket range from $91 to $689. In other US cities, tickets are being resold for several multiples of those values.

The Riksbank was one of the last Western central banks to start raising interest rates, moving only away from the lower bound of zero in May last year. Its benchmark rate is 3.5%, and most economists, like Grahn, expect two more hikes this year as it tries to bring inflation down to its 2% target.

The consensus expectation for Swedish core inflation in May was 7.8%. The Riksbank predicted a figure of 8.1%.

Beyoncé’s “Renaissance” tour departed Stockholm for several European capitals, including Brussels, Cardiff, Edinburgh and five nights in London. She has seven more dates in Germany, Holland and Poland before heading to Canada and the US. However, its impact has yet to appear in any of the other countries’ inflation data.

Big sports tournaments often distort economic statistics, but economists say it’s rare for a single event to do that.

Translated by Luiz Roberto Gonçalves