Inflation in Sweden

A short history of inflation in Sweden

Devaluation and the ERM Crisis (1976 to 1992)

Sweden devalued the krona five times between 1976 and 1982 in an attempt to protect industry, a strategy that produced inflation in the high single figures and above without solving the underlying problem. It ended abruptly. Defending the krona's peg in September 1992 the Riksbank raised its overnight rate to 500%, and gave up two months later, letting the currency float.

The Inflation Target (1993 onwards)

With the exchange rate gone as an anchor, Sweden adopted an explicit inflation target in January 1993, among the first countries to follow New Zealand. It has held since, and the more common problem in the years afterwards was inflation persistently below the target rather than above it. Sweden has not adopted the euro, having voted against it in 2003.

Post-Covid Inflation (2021 to 2023)

In Sweden, prices rose fastest in December 2022, at 10.8%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.