Taylor Swift effect on inflation - "a setback"

Inflation is falling, but less than expected. This can be partly explained by rising hotel costs – to some extent a Taylor Swift effect, according to assessors. There may be a temporary Swift or Eurovision effect here, says chief economist Alexandra Stråberg.

» Updated:

» Published:

Taylor Swift effect on inflation - "a setback"
Photo: Anders Wiklund/TT

Share this article

Inflation falls, but less expected.

It can be partly explained by rising hotel costs – to some extent a Taylor Swift effect, according to analysts.

There may be a temporary Swift or Eurovision effect here, says chief economist Alexandra Stråberg.

Swedish inflation fell to 3.7 per cent in May, according to the KPI measure.

Economists had instead expected an inflation rate of 3.5 per cent, according to Bloomberg. In April, the annual price increase rate was 3.9 per cent.

This is a setback, says Alexandra Stråberg, chief economist at Länsförsäkringar.

Rising interest costs are still contributing significantly to the inflation rate, according to Statistics Sweden (SCB).

Inflation, according to the Riksbank's measure, KPIF (with interest rate effects removed), remained steady at 2.3 per cent in May. Expected was 2.1 per cent.

Taylor Swift effect

On a monthly basis, i.e. the price increase compared to April, transport services such as car rentals, train and air travel rose relatively much, six per cent. Hotels and accommodation also became more expensive, eleven per cent, which was more than expected.

It has been speculated that the giant concerts in Stockholm with the American artist Taylor Swift would drive up, among other things, hotel prices.

It's a small partial explanation, but service prices rose more broadly than that, says Nordea's chief analyst Susanne Spector.

And it's a small risk factor for the Riksbank, she continues.

Two cuts?

According to Robert Boije, chief economist at SBAB, the most important message is that inflation did not rise.

"Today's inflation figure for May from SCB gives no reason to change the conclusion that the inflation spectre in the Swedish economy is gone", he says in a comment.

The May figure, however, closes the door for a June cut from the Riksbank, according to Susanne Spector. Interest rate cuts are to be expected in the autumn, she believes.

Länsförsäkringar, on the other hand, expects three more cuts this year.

But this may have increased the likelihood of there only being two cuts, says Alexandra Stråberg.

It depends on next month. There are quite a few months left ahead that must confirm that the inflation journey is heading downwards, she adds.

Geopolitics a factor

Looking ahead, however, it looks bright – the inflation target of 2 per cent will be reached.

The worry clouds concern rather global events that can drive up inflation or further krona weakening, says Alexandra Stråberg.

The geopolitical uncertainty is an uncertainty factor, according to Shoka Åhrman, private economist at SPP:

"That can affect both prices and how other central banks act going forward", she says in a comment.

Tags

Author

TTT
By TTEnglish edition by Sweden Herald, adapted for local and international readers

More news

France's Credit Rating Downgraded by Fitch

France's Credit Rating Downgraded by Fitch

Microsoft Gains Amid Mixed US Market

Microsoft Gains Amid Mixed US Market

FTC Investigates Google and Amazon Over Advertising Practices

FTC Investigates Google and Amazon Over Advertising Practices

US Proposes G7 Tariffs on China and India Over Russian Oil Purchases

US Proposes G7 Tariffs on China and India Over Russian Oil Purchases

Taco Bell Plans Expansion into Sweden with First Stockholm Location

Taco Bell Plans Expansion into Sweden with First Stockholm Location

Russia's Central Bank Makes Smaller Than Expected Interest Rate Cut

Russia's Central Bank Makes Smaller Than Expected Interest Rate Cut

ECB Officials Divided on Future Interest Rate Decisions

ECB Officials Divided on Future Interest Rate Decisions

Klarna CEO Secures Billion-Kronor Loan to Buy Out Co-Owner

Klarna CEO Secures Billion-Kronor Loan to Buy Out Co-Owner

Six Suspects in Consultant Scandal Face Charges After Spain Raid

Six Suspects in Consultant Scandal Face Charges After Spain Raid

Microsoft to Remove Teams from Office Package in EU Agreement

Microsoft to Remove Teams from Office Package in EU Agreement

UK Economy Growth Stagnant in July as GDP Remains Unchanged

UK Economy Growth Stagnant in July as GDP Remains Unchanged

German Inflation Rises to 2.2 Percent in August

German Inflation Rises to 2.2 Percent in August

Global Stock Markets Rise Slightly Ahead of Expected US Rate Cut

Global Stock Markets Rise Slightly Ahead of Expected US Rate Cut

Insurance Guide: What to Know After Västernorrland Floods

Insurance Guide: What to Know After Västernorrland Floods

Asian Stock Markets Rise on Week's Last Trading Day

Asian Stock Markets Rise on Week's Last Trading Day

Trump Seeks Court Approval to Dismiss Fed Member Before Rate Decision

Trump Seeks Court Approval to Dismiss Fed Member Before Rate Decision

Warner Bros Discovery Surges on Wall Street Amid Paramount Bid Rumors

Warner Bros Discovery Surges on Wall Street Amid Paramount Bid Rumors

US Inflation Matches August Expectations

US Inflation Matches August Expectations

ECB Keeps Interest Rates Steady

ECB Keeps Interest Rates Steady

Novo Nordisk to End Remote Work in 2024

Novo Nordisk to End Remote Work in 2024