Swedish Central Bank Chief Says Inflation Surge Due to Energy Prices

Swedish Inflation Surge Linked to Energy Costs, Says Riksbank

STOCKHOLM (Reuters) – A surge in headline inflation in Sweden is due to high energy prices and the central bank does not need to change its monetary policy plans at the moment, Riksbank Governor Stefan Ingves said on Tuesday.

Headline inflation was 3.6% in November compared to the same month in 2020 – the fastest rise since 1993 – figures published by the Statistics Office on Tuesday showed.

“If you look at the latest inflation measure, much of it is due to energy prices,” Governor Stefan Ingves said in an interview with Swedish news agency TT.

“If you take away energy prices … the pace of inflation is 1.9%.”

The central bank targets headline inflation of 2%.

Asked if the current level of inflation was close to a level the Riksbank could not tolerate, Ingves said: “You cannot say that at the moment.”

At its most recent meeting, the Riksbank held policy broadly unchanged, arguing that a spike in inflation was due to problems related to economies restarting after the pandemic and would probably not last long.

“If you look at the most recent monetary policy report we expect inflation to be a bit over 3% for the next six months,” Ingves said. “Then, after that, inflation will fall back again.”

The Riksbank has already started to taper its bond purchase programme, launched during the pandemic. It plans to hold its balance sheet broadly unchanged next year.

It has penciled in a rate hike – which would be the first since the start of the pandemic – some time in late 2024.

(Reporting by Simon Johnson; Editing by Alexandra Hudson)