The Warning: Food Prices May Be on the Way Up

Inflation is expected to rise again when the figures for November are reported this week. Once again, households must prepare for more expensive food. I think it looks quite negative. The signals in recent times are that food prices are being pushed up, says Carl Nilsson, economist at Swedbank.

» Published: December 04 2024

The Warning: Food Prices May Be on the Way Up
Photo: Henrik Montgomery/TT

On Thursday at 8 am, Statistics Sweden (SCB) will release new inflation figures according to the so-called "quick measure" introduced in the autumn.

The inflation increase seen in October is expected to continue, according to both Handelsbanken and Swedbank. Handelsbanken predicts an inflation rate of 2.2 percent, while Swedbank's estimate is 2.0 percent, both according to the KPIF measure. The calculations can be compared to 1.5 percent the previous month.

Is it time to worry and for the Swedish Central Bank to hesitate about an interest rate cut in December? Not at all, according to Carl Nilsson.

Free ride on electricity prices

We've had a free ride on electricity prices being so low, and there have been remarkably small price movements. Now, in November, we got this price increase on electricity, which is not remarkable but makes inflation tick up, he says and develops:

It's a fairly welcome increase, though, since it's in line with the Swedish Central Bank's inflation target (2.0 percent).

In line with the inflation pressure easing from its peak last year, the Swedish Central Bank has also lowered the repo rate, most recently in the form of a double cut. This month's inflation increase should not prevent the Swedish Central Bank's board of directors from continuing to cut, potentially to a repo rate of 2.50 percent.

We see no reason to change that forecast. With inflation at target and weak domestic consumption, there's no reason for the Swedish Central Bank to rest on its laurels, rather continue in the same direction, says Carl Nilsson.

Food prices may rise

More challenging is the direction food prices seem to be taking. Carl Nilsson sees several signals that prices may rise, including as a consequence of increasingly high raw material prices, such as coffee.

Since the turn of the year, the trend in raw material prices has been very clear upwards. I'm a bit worried that this will show up in the consumer sector.

Carl Nilsson notes that it's not the same level as the price increase in 2021-22, but it could be noticeable for consumers.

We note, among other things, that Arla continues to raise the compensation price to its milk producers. This usually affects the consumer sector fairly quickly.

On Thursday, Statistics Sweden (SCB) will present new inflation figures for November according to the quick measure introduced.

In October, inflation according to the Swedish Central Bank's measure, KPIF, i.e., with interest rate effects excluded, was 1.5 percent compared to 1.1 percent in September.

Several economists believe that inflation will continue to rise.

Analysts expect, on average, that KPIF (inflation adjusted for loan effects) will increase to 1.9 percent in the November report, according to Bloomberg's compilation.

KPIF excluding energy prices is expected to rise to 2.4 percent, up from 2.1 percent in October.

The pure KPI figure for November, including interest rate effects, is expected to remain unchanged from October at 1.6 percent.

The next interest rate decision from the Swedish Central Bank will be announced on December 19.

Tags

TTT
By TTTranslated and adapted by Sweden Herald

More news

Geely to Acquire Full Ownership of Zeekr in $6.4 Billion Deal
1 MIN READ

Geely to Acquire Full Ownership of Zeekr in $6.4 Billion Deal

Weight Watchers Files for Chapter 11 to Restructure $1.15 Billion Debt
1 MIN READ

Weight Watchers Files for Chapter 11 to Restructure $1.15 Billion Debt

Eurozone Retail Trade Slightly Down in March
1 MIN READ

Eurozone Retail Trade Slightly Down in March

Preem Reports Q1 Loss but Sees Positive Trend in Diesel and Renewables
1 MIN READ

Preem Reports Q1 Loss but Sees Positive Trend in Diesel and Renewables

Trump's Houthi Decision Impacts European Shipping Stocks
1 MIN READ

Trump's Houthi Decision Impacts European Shipping Stocks

Ørsted Halts Hornsea 4 Offshore Wind Project Amid Rising Costs
1 MIN READ

Ørsted Halts Hornsea 4 Offshore Wind Project Amid Rising Costs

Saab Secures 1.3 Billion Kronor Order for Light Torpedoes in Sweden
1 MIN READ

Saab Secures 1.3 Billion Kronor Order for Light Torpedoes in Sweden

Swedish Inflation Too High for Central Bank to Cut Rates
2 MIN READ

Swedish Inflation Too High for Central Bank to Cut Rates

Sats Gym Chain Sees Membership and Profit Surge in First Quarter
1 MIN READ

Sats Gym Chain Sees Membership and Profit Surge in First Quarter

BMW Stock Rises Despite China Sales Slump and Profit Decline
1 MIN READ

BMW Stock Rises Despite China Sales Slump and Profit Decline

Cloetta Reports Profit Growth Amid Higher Chocolate Prices
1 MIN READ

Cloetta Reports Profit Growth Amid Higher Chocolate Prices

Novo Nordisk Shares Climb 4 Percent Despite Lowered 2025 Forecast
1 MIN READ

Novo Nordisk Shares Climb 4 Percent Despite Lowered 2025 Forecast

Skanska Reports Doubling of Profit in First Quarter
1 MIN READ

Skanska Reports Doubling of Profit in First Quarter

Stock Market Steady as US-China Trade Talks Approach
2 MIN READ

Stock Market Steady as US-China Trade Talks Approach

Intrum Reports Increased Profit, Expects Capital Boost by July
1 MIN READ

Intrum Reports Increased Profit, Expects Capital Boost by July

China Stocks Rise Amid US Trade Talks Announcement
1 MIN READ

China Stocks Rise Amid US Trade Talks Announcement

China Reduces Key Interest Rate to 1.4 Percent
1 MIN READ

China Reduces Key Interest Rate to 1.4 Percent

US and China to Hold First Major Trade Talks Since Tariff War
1 MIN READ

US and China to Hold First Major Trade Talks Since Tariff War

US Stock Market Declines as AI-Related Stocks Weigh Down Indices
1 MIN READ

US Stock Market Declines as AI-Related Stocks Weigh Down Indices

Savers Show High Activity Amid Stock Market Crash
2 MIN READ

Savers Show High Activity Amid Stock Market Crash