Swedish inflation remains high, even without Beyoncé – 25/07/2023 – Market

Sweden’s high inflation can no longer be blamed on a single woman, with price pressures remaining strong, even eliminating the rise in restaurant and hotel costs that economists blamed on Beyoncé’s Stockholm concerts.

The American singer was thrust into the macroeconomic spotlight last month when economists linked the first two shows of her “Renaissance” tour – which kicked off in the Swedish capital on May 10 – to an unexpectedly high inflation reading for that month.

Danske Bank blamed a record 3.3% monthly rise in restaurant and hotel prices in May for Beyonce’s arrival. Inflation in that category slowed to just 0.33% in June, suggesting a transitory Beyoncé effect.

“This kind of ‘turflation’ seems to no longer exist in June, as we suggested it did in May,” said Filip Andersson, head of Nordic macroeconomic research at the lender bank. “June was still a strong and seasonal month [mas] the rise in May was simply extraordinary.”

However, headline inflation was higher than economists’ forecasts and fell only slightly, from 9.7% in May to 9.3% last month, as domestic factors outweighed any effect related to the pop muse’s concerts in the country.

Price increases for holiday packages, car rentals and international flights, with Swedes taking their summer vacation, fueled a 0.9% monthly rise in prices.

Adrian Prettejohn, European economist at Capital Economics, said there was “some evidence that there may have been a Beyoncé effect” due to the slowdown in hotel and restaurant price increases. However, he added, the change “does not change the general picture of Swedish inflation, which is quite strong, more than expected”.

The June inflation figures keep the pressure on the Riksbank, which is expected to raise interest rates by 25 basis points to 4% at its September meeting.

Statistics Sweden, the country’s statistics bureau, said the CPIF, the central bank’s preferred measure of price change, fell to 6.4% from 6.7%. Economists polled by Bloomberg had expected a slowdown to 6%. The CPIF-XE, which excludes the volatile energy component, fell just to 8.1% from 8.2% in a sign of sticky prices.

The decline in global inflation was driven in part by falling food inflation and lower clothing prices. There was additional compensation for falling electricity and fuel prices.

Francesco Pesole, currency strategist at ING Bank, said the krona’s strength last week should ease inflationary pressures by lowering import costs. “The krona recovery is offering some breathing room for the Riksbank, but evidence of persistent inflation – combined with expectations of a longer-term inflation recovery – suggest that a rise at the September meeting is quite likely,” he said.

The weakness of the Swedish currency against the dollar is behind the rise in hotel prices triggered by Beyoncé’s concerts, as her fans in the United States took advantage of relatively cheap tickets to see her in Stockholm