Sweden’s Inflation Rate Eases to 3.7% in May Amid Falling Electricity Prices

• Rising interest rates for household’s mortgages costs are still contributing to the annual inflation rate.
• Electricity and fuel prices went down in May.
• In May, prices of transport services increased.
• The annual inflation rate according to CPIF excluding energy, increased from 2.9 percent in April to 3.0 percent in May.
• A quick indicator for the inflation named “CPI flash estimate”, will begin to be published this autumn.

Lower electricity prices in May

The CPI increased by 0.2 percent from April to May. In the corresponding period a year ago, prices increased by 0.3 percent.

The monthly change in May was mainly contributed to several price rises in transport services like car rental, railway- and air travel. Likewise, there were price increases for hotel visits, package holidays and food. The price increase was dampened by lower electricity and fuel prices.

The table below shows changes on a monthly basis and contributions to the CPI based on the goods and services that had the greatest impact on the CPI in May 2024. The results are presented by COICOP category. COICOP refers to the United Nations classification of household consumption expenditure.

Contributions to the inflation rate in May

The inflation rate according to the CPI, that is, the change in the CPI from the same month last year, was 3.7 percent in May 2024. This is a decrease from April, when the inflation rate was 3.9 percent.

The contributions to the inflation rate in May mostly came from higher housing costs, which was mainly affected by increased mortgage costs.  The increased mortgage costs contributed with 1.6 percentage points to the inflation rate. The corresponding number for April was 1.8 percentage points, which shows that the contribution is declining. The housing costs was also affected by increased fees for rented and tenant-owned apartments. The higher housing costs was partly offset by lower electricity prices.

During the past 12 months, there have been price increases in services such as restaurant visits, transport services, and recreational and cultural services. Furthermore, there have been price increases in food and clothing.

The inflation rate according to CPIF, which unlike CPI is not affected by changes in mortgage interest rates, was 2.3 percent in May, which is unchanged compared to April.

The inflation rate calculated excluding energy products (CPIF-XE) was 3.0 percent in May which is an increase compared to April when it was 2.9 percent.

Different measures of inflation

Statistics Sweden calculates different inflation measures for different purposes. The CPIF is the Riksbank’s target variable, while CPI is the measure used for purposes of compensation. The CPIF includes the same goods and services as CPI. The difference between the CPI and the CPIF is that the latter measure holds interest rates for household’s mortgages constant. Consequently, the effect of changed interest rates for household’s mortgages is only captured by the CPI and not the CPIF.

Additional to the CPI and the CPIF, the HICP is also calculated. The HICP is a harmonized measure of inflation used within the EU cooperation. Another index that is calculated each month is CPIF-XE (the CPIF excluding energy products) which is often used as a measure of underlying inflation.

CPI flash estimate

In the autumn, Statistics Sweden will introduce an aggregated indicator called the CPI flash estimate. The CPI flash estimate, which is a preliminary figure, will be published five working days before the regular publication. Annual and monthly changes will be published for the CPI, CPIF and CPIF-XE. The aggregates published for the CPI flash estimate refer to preliminary results and may differ from ordinary publications.