Sweden's inflation in May exceeded forecasts, possibly due to Beyonce's concert at the Friends Arena in Stockholm causing a surge in hotel prices.
Statistics Sweden data published on Wednesday reveals an 8.2 per cent year-on-year rise in a price measure excluding energy costs and interest rate effects.
This increase surpassed both the median Bloomberg survey estimate of 7.8 per cent and the 8.1 per cent projection from the Riksbank.
Beyonce's world tour premiere in Stockholm, which attracted more than 80,000 fans over two days, may have significantly influenced this unexpected rise in hotel and recreation prices.
“We believe this unexpected rise might normalise in June as hotel and ticket prices return to standard rates,” Michael Grahn, chief economist at Danske Bank, said.
Despite this, Danske predicts further interest rate rises from the Riksbank as the Swedish currency's weakness and persistent inflation remain concerns.
Glenn Nielsen, an economist at Swedbank, concurred that Beyonce's concerts might have contributed to May's increased accommodation costs.
He added that the surprisingly robust price surge was largely due to high demand and increased cost pressures, pushing hotels to raise their prices.
This inflation data comes at a time when global price pressures are decreasing.
Recent data showed that US inflation slowed to its lowest level since March 2021.
Likewise, May's consumer prices in the eurozone rose less than expected.
Despite these trends, Swedish prices continue to rise faster than the central bank's target, further complicated by the weak Swedish currency.
This situation mirrors that of neighbouring Norway, where the cost of imported goods has increased due to currency weakness.
The Swedish krona's recent performance, trading near all-time lows against the euro, further pressures the Riksbank to maintain a higher benchmark rate than the European Central Bank.
The ECB is expected to raise its deposit rate to 3.5 per cent on Thursday, bringing it in line with the Riksbank, which also plans a rate increase this month or in September.
With the latest price data in view, most economists foresee a quarter-point rate increase announcement from the Riksbank on June 29, notwithstanding any temporary Beyonce effect.
“May's inflation figures were higher than anticipated, considering the broad upturn,” Torbjorn Isaksson of Nordea said. “This reinforces our prediction of a Riksbank rate hike in June.”
