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4.2
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Housing investment is expected to continue to develop weakly (see Figure 44), thereby burdening growth in 2024 as well.54 This investment is now falling unusually sharply in relation to housing prices and is expected to fall further.
23/11/2023
Nov-23
par_body
null
null
null
negative
This is partly due to higher construction costs in combination with lower demand.
23/11/2023
Nov-23
par_body
null
null
null
negative
The price fall in housing is expected to be almost 15 per cent in relation to the peak in February 2022.
23/11/2023
Nov-23
par_body
null
null
null
negative
Towards the end of 2024, when inflation is lower and real disposable household income rises, demand for housing is expected to pick up again along with housing prices.
23/11/2023
Nov-23
par_body
null
null
null
positive
In turn, this is also expected to affect housing investment with a certain lag (see Figure 44).
23/11/2023
Nov-23
par_body
null
null
null
neutral
The Swedish labour market is expected to resist the GDP downturn relatively well (see Figure 45).
23/11/2023
Nov-23
par_body
null
null
null
positive
The employment rate will fall back slightly from the record peak levels but is expected to increase again in 2025.
23/11/2023
Nov-23
par_body
null
null
null
neutral
Unemployment will rise again over the next year to peak at just over 8.5 per cent, after which it will subside again.
23/11/2023
Nov-23
par_body
null
null
null
negative
Resource utilisation is expected to fall and be below normal in 2024 and 2025, before normalising towards the end of the forecast period (see Figure 39).
23/11/2023
Nov-23
par_body
null
null
null
negative
However, there is a risk that the deterioration of the labour market may be greater.
23/11/2023
Nov-23
par_body
null
null
null
negative
The occupation rate is very high at present and there are some indications that companies may have more staff than they really need.
23/11/2023
Nov-23
par_body
null
null
null
neutral
The last twenty-year period also shows that things can move very quickly when the labour market turns and developments therefore must be monitored closely.
23/11/2023
Nov-23
par_body
null
null
null
neutral
Wage growth according to short-term wage statistics is expected to continue rising in Sweden and peak at the beginning of next year, which is in line with the profile of the central wage agreements.
23/11/2023
Nov-23
par_body
null
null
null
neutral
The wage agreements that in most cases will apply until the beginning of 2025, mean that wage growth this year and next year will be higher than last year.
23/11/2023
Nov-23
par_body
null
null
null
positive
So far, however, wage growth outside the scope of the agreements has been very low from a historical perspective (see Figure 43).
23/11/2023
Nov-23
par_body
null
null
null
negative
Hourly labour costs, i.e.
23/11/2023
Nov-23
par_body
null
null
null
neutral
wages and employers' contributions combined, will increase by between 3.5 and 4 per cent per year in line with short-term wages.
23/11/2023
Nov-23
par_body
null
null
null
neutral
Productivity is expected to rise gradually from a very low level and the rate of increase in unit labour costs will thereby fall back and is expected to increase by 2 per cent towards the end of the forecast period.
23/11/2023
Nov-23
par_body
null
null
null
neutral
Fiscal policy is currently deemed neutral in Sweden and is not affecting economic activity to any greater degree, but how it will develop towards the end of the forecast period is more uncertain.
23/11/2023
Nov-23
par_body
null
null
null
neutral
Unlike Sweden, the United States, in particular, continues to have large budgetary deficits.
23/11/2023
Nov-23
par_body
null
null
null
negative
The tighter monetary policy has helped to reduce inflation.
21/09/2023
Sep-23
sum
Intro
0
null
positive
To ensure that inflation continues to fall and stabilise around the target within a reasonable period of time, monetary policy needs to continue to be tightened somewhat.
21/09/2023
Sep-23
sum
Intro
0
null
hawkish
The Executive Board has therefore decided to raise the policy rate by 0.25 percentage points, to 4 per cent.
21/09/2023
Sep-23
sum
Intro
0
null
hawkish
The decision is in line with the assessment at the monetary policy decision in June.
21/09/2023
Sep-23
sum
Intro
0
null
neutral
Inflation is falling in Sweden.
21/09/2023
Sep-23
sum
Intro
0
null
positive
The rate of increase in energy and food prices has slowed significantly, which is positive.
21/09/2023
Sep-23
sum
Intro
0
null
positive
But inflation pressures are still too high.
21/09/2023
Sep-23
sum
Intro
0
null
negative
Service prices continue to rise at a rapid pace, which, together with the unjustifiably weak krona, contribute to keeping up inflation and increasing the risk that inflation will not continue to fall and stabilise around the target sufficiently quickly.
21/09/2023
Sep-23
sum
Intro
0
null
negative
The policy rate is at a contractionary level, and is dampening demand in the economy.
21/09/2023
Sep-23
sum
Intro
0
null
negative
This is necessary for inflation to fall back towards the target within a reasonable period of time.
21/09/2023
Sep-23
sum
Intro
0
null
hawkish
According to the Riksbank's forecast, GDP is expected to fall somewhat going forward, at the same time as in the labour market slows down.
21/09/2023
Sep-23
sum
Intro
0
null
negative
Together with an expected modest appreciation of the krona in the coming years, this will help inflation to fall back and be close to the target of 2 per cent in 2024.
21/09/2023
Sep-23
sum
Intro
0
null
positive
The forecast for the policy rate indicates that it can be raised further.
21/09/2023
Sep-23
sum
Intro
0
null
hawkish
As before, the assessment is that monetary policy needs to be contractionary for a longer period of time for inflation to fall back and stabilise close to the target of 2 per cent.
21/09/2023
Sep-23
sum
Intro
0
null
hawkish
New information and how it is expected to affect the outlook for the economy and inflation will be decisive in determining the monetary policy stance
21/09/2023
Sep-23
sum
Intro
0
null
neutral
Increased policy rate for inflation to stabilise around the target within a reasonable time
21/09/2023
Sep-23
sec_title
null
1
null
hawkish
The substantial and rapid interest rate hikes by central banks since the beginning of last year have helped to reduce global inflation.
21/09/2023
Sep-23
sec_sum
null
null
null
positive
Many central banks have now begun to adjust their monetary policy in more gradual steps, but have at the same time signalled that rate cuts lie far in the future.
21/09/2023
Sep-23
sec_sum
null
null
null
neutral
Inflation in Sweden is also falling, but inflationary pressures are still too high.
21/09/2023
Sep-23
sec_sum
null
null
null
negative
The main elements in the development of prices remain the same since June: The rate of increase in energy and food prices is slowing significantly, at the same time as service prices are continuing to increase at too rapid a pace, which is contributing substantially to total inflation.
21/09/2023
Sep-23
sec_sum
null
null
null
negative
The krona exchange rate is still unjustifiably weak, which is holding up the price increases of imported goods.
21/09/2023
Sep-23
sec_sum
null
null
null
negative
For inflation to return to the target of 2 per cent within a reasonable period of time, the Executive Board assesses that monetary policy needs to be tightened further somewhat, in line with the assessment made in June.
21/09/2023
Sep-23
sec_sum
null
null
null
hawkish
The Executive Board has therefore decided to raise the Riksbank’s policy rate by 0.25 percentage points, to 4 per cent.
21/09/2023
Sep-23
sec_sum
null
null
null
hawkish
The forecast for the policy rate indicates that it can be raised further.
21/09/2023
Sep-23
sec_sum
null
null
null
hawkish
As before, the assessment is that monetary policy needs to be contractionary for a longer period of time for inflation to fall back and stabilise close to the target of 2 per cent.
21/09/2023
Sep-23
sec_sum
null
null
null
hawkish
New information and how it is expected to affect the prospects for the economy and inflation will be decisive in determining the monetary policy stance.
21/09/2023
Sep-23
sec_sum
null
null
null
neutral
Inflation is falling, but is still far above the target
21/09/2023
Sep-23
sub_sec_title
null
1.1
null
negative
Growth in Sweden slowing rapidly
21/09/2023
Sep-23
par_title
null
null
null
negative
Growth has slowed down faster in Sweden than abroad.
21/09/2023
Sep-23
par_body
null
null
null
negative
Household consumption has fallen and just as earlier in the year, consumption of goods is showing a considerably weaker development than consumption of services.
21/09/2023
Sep-23
par_body
null
null
null
negative
Housing investment is at the same time continuing to fall sharply.
21/09/2023
Sep-23
par_body
null
null
null
negative
The overall picture remains the same as before: The interest-rate sensitive sectors in the Swedish economy slow down significantly when monetary policy is tightened
21/09/2023
Sep-23
par_body
null
null
null
negative
Like in many other countries, the labour market in Sweden has so far withstood the economic downturn better than expected, and it is very strong in a historical perspective.
21/09/2023
Sep-23
par_body
null
null
null
positive
A possible explanation is that companies are to a greater extent retaining labour, despite the economic downturn.
21/09/2023
Sep-23
par_body
null
null
null
positive
This is probably due to lessons learned from the recovery after the pandemic, when many countries experienced problems getting hold of labour.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The behaviour may have been reinforced by companies having raised their prices considerably, at the same time as wage increases have been relatively restrained.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The companies have thereby managed to maintain profitability and in this way have had better capacity to retain their labour.
21/09/2023
Sep-23
par_body
null
null
null
positive
After the summer, however, the labour market has shown more signs of slowing down.
21/09/2023
Sep-23
par_body
null
null
null
negative
There are conditions for inflation to continue falling...
21/09/2023
Sep-23
par_title
null
null
null
positive
CPIF inflation is continuing to fall from the peak of around 10 per cent at the end of last year and amounted to 4.7 per cent in August.
21/09/2023
Sep-23
par_body
null
null
null
positive
Underlying inflation measured as the CPIF excluding energy is, however, higher and also falling at a slower pace, from just over 9 per cent at the start of the year to 7.2 per cent in August.
21/09/2023
Sep-23
par_body
null
null
null
negative
Inflation is often measured as the change in price level compared with one year ago.
21/09/2023
Sep-23
par_body
null
null
null
neutral
Figure 3 instead shows the price changes 3 months ahead, calculated as an annual rate.
21/09/2023
Sep-23
par_body
null
null
null
neutral
It is clear that the CPIF is increasing considerably slower than the highest levels last year.
21/09/2023
Sep-23
par_body
null
null
null
positive
But this is to a large extent linked to the falling energy prices.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The price change in the CPIF excluding energy has not decreased as significantly.
21/09/2023
Sep-23
par_body
null
null
null
negative
The short-term price changes in food and goods have declined from the highest levels last year.
21/09/2023
Sep-23
par_body
null
null
null
positive
But the short-term change in service prices so far does not show any clear downward trend and needs to fall going forward for inflation to reach 2 per cent.
21/09/2023
Sep-23
par_body
null
null
null
neutral
All in all, the price changes are moving in the right direction, but they are still too high, both measured in terms of annual percentage change and more short-term monthly changes.
21/09/2023
Sep-23
par_body
null
null
null
negative
But there are conditions for inflation to decline further.
21/09/2023
Sep-23
par_body
null
null
null
neutral
Price increases in the producer stage have continued to slow down.
21/09/2023
Sep-23
par_body
null
null
null
neutral
Moreover, an ever smaller percentage of companies responding to the National Institute of Economic Research's Economic Tendency Survey state that they are planning to raise prices in the near term (see Figure 4).
21/09/2023
Sep-23
par_body
null
null
null
neutral
...but price pressures in the economy are still too high
21/09/2023
Sep-23
par_title
null
null
null
negative
Despite the conditions for inflation to fall going forward there are several indications that price pressures in the Swedish economy are still too high.
21/09/2023
Sep-23
par_body
null
null
null
negative
A cause for concern is that the price changes are still above the levels that are compatible with 2-per cent inflation (see Figure 3).
21/09/2023
Sep-23
par_body
null
null
null
negative
This applies in particular to the CPIF excluding energy, which has increased by almost 5 per cent over the past three months, calculated as an annual rate.
21/09/2023
Sep-23
par_body
null
null
null
negative
The short-term rates of increase must decline for inflation to reach the target.
21/09/2023
Sep-23
par_body
null
null
null
hawkish
At the same time, the National Institute of Economic Research’s Economic Tendency Survey has shown that the percentage of companies planning to raise their prices in the near term is still very elevated in the retail sector (see Figure 4).
21/09/2023
Sep-23
par_body
null
null
null
neutral
Another cause for concern is that the rate of increase in service prices does not show sufficient sign of slowing down (see Figure 3).
21/09/2023
Sep-23
par_body
null
null
null
negative
This could be a reflection of household demand for services remaining relatively high.
21/09/2023
Sep-23
par_body
null
null
null
positive
Service prices have a weight of close to 50 per cent in the CPI basket, which together with the high rate of increase makes a large contribution to inflation (see Figure 5).
21/09/2023
Sep-23
par_body
null
null
null
neutral
Long-term inflation expectations have been strikingly stable during the period with high inflation, which shows that there is strong confidence in monetary policy (see Figure 6).
21/09/2023
Sep-23
par_body
null
null
null
neutral
This spring's industrial agreement is a further indication of this.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The agreement significantly reduced the risk of a wage-price spiral in the Swedish economy, but it also strengthens the importance of the Riksbank’s task of bringing inflation back to the target within a reasonable time.
21/09/2023
Sep-23
par_body
null
null
null
neutral
It is also important that short-term inflation expectations continue to fall towards 2 per cent for inflation to stabilise around the target going forward.
21/09/2023
Sep-23
par_body
null
null
null
neutral
For some time, expectations one year ahead have been falling significantly, even though household expectations rose somewhat in the last outcome (see Figure 6).
21/09/2023
Sep-23
par_body
null
null
null
neutral
The fact that CPIF inflation is continuing to fall contributes to this development, as short-term expectations are affected considerably by actual inflation outcomes.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The high inflation also affects the direction of fiscal policy.
21/09/2023
Sep-23
par_body
null
null
null
neutral
A clearly expansionary fiscal policy with broad stimulation measures would probably increase inflation and affect monetary policy in a more contractionary direction.
21/09/2023
Sep-23
par_body
null
null
null
dovish
But there are many fiscal policy measures that can be taken without overall fiscal policy being inflationary for that reason.
21/09/2023
Sep-23
par_body
null
null
null
neutral
In connection with the autumn budget bill, the Government has communicated that fiscal policy should not hamper the Riksbank’s possibilities to bring down inflation.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The Riksbank's forecast assesses that fiscal policy will not on the whole affect the prerequisites for monetary policy to return inflation to the target.
21/09/2023
Sep-23
par_body
null
null
null
neutral
Continued weak krona keeping up inflation going forward
21/09/2023
Sep-23
par_title
null
null
null
negative
During the summer, the krona has continued to develop weakly – and somewhat weaker than in the June forecast.
21/09/2023
Sep-23
par_body
null
null
null
negative
There are many hypotheses regarding why this happens.
21/09/2023
Sep-23
par_body
null
null
null
neutral
The Riksbank's forecast for the krona rate is based on an assessment of the real exchange rate’s long-term level, showing that the krona is undervalued at present and can therefore be expected to strengthen going forward.
21/09/2023
Sep-23
par_body
null
null
null
positive
However, it is uncertain both how the krona will develop and what impact the changes in the krona rate will have on inflation in a situation where inflation is already high.
21/09/2023
Sep-23
par_body
null
null
null
neutral
If the krona were to continue to weaken, it would contribute to raising the forecast for inflation and thereby also increase the need for monetary policy tightening.
21/09/2023
Sep-23
par_body
null
null
null
hawkish
The impact of a weaker krona can also prove to be greater than is assumed in the forecast, which poses a further upside risk for inflation going forward.
21/09/2023
Sep-23
par_body
null
null
null
negative
Monetary policy needs to be tightened somewhat further
21/09/2023
Sep-23
sub_sec_title
null
1.2
null
hawkish