Swedish Government Adjusts Inflation Forecast Amid Uncertainty
STOCKHOLM (Reuters) - Sweden's right-wing government on Wednesday hiked its forecast for inflation this year and said it would monitor the development of price pressures as the economy slowly recovered against a backdrop of global uncertainty.
The government said in a statement it sees headline inflation at 2.5% this year and 1.9% in 2026, up from its December forecasts of 2.0% and 1.8%, respectively. It also slightly raised its growth forecast for this and next year.
Finance Minister Elisabeth Svantesson said less than a year ago that the battle to push back inflation had been won after price rises began slowing from double-digit highs hit during the global post-pandemic surge in costs.
Data in the early months of this year has cast some doubts on that assertion with inflation coming in higher than expected and well above the central bank's 2% target, undermining expectations the Riksbank might cut rates further this year.
Svantesson told a press conference she stuck by her statement on inflation from last year. "But of course we will keep our eyes on the development of inflation in the months ahead."
With growth in the Swedish economy yet to fully recover and unemployment running high against a backdrop of global trade tensions, both monetary and fiscal policy makers are left with an uncertain outlook for the months ahead.
"The conditions abroad are brutally uncertain," Svantesson said.
Earlier on Wednesday, a survey showed a broad measure of inflation expectations one year ahead rose sharply though they saw a more limited rise in the five-year interval.
The Riksbank is due to present its latest rate decision on Thursday and is expected to keep its key policy rate unchanged.
(Reporting by Niklas Pollard and Stine Jacobsen, additional reporting by Johan Ahlander; editing by Terje Solsvik and Anna Ringstrom)
