Summary

In this commentary, I have created two price indices from the National Accounts and CPI statistics: One for product categories with a low import content and one for high import content. In recent decades, the share of products with a low import content has increased in Swedish consumption and as a result, their weight in inflation has risen. There is less global competition for these components of consumption and in addition, sticky wage costs make up a larger share of total business costs. In this commentary, I show that the increase in the rate of price increase in product categories with a low import content over the latest inflation cycle has come later and has so far remained at a high level for longer than it has for categories with a high import content. During other CPIF inflation upturns and declines during the inflation-targeting period, categories with a low import content have exhibited a stickiness in the rate of price increase both upwards and downwards. An increased share of the category with a low import content in the CPIF over time may thus have contributed to inflation remaining at a high level for longer than it would otherwise have done. Forecasts may therefore need to take more account of varying degrees of stickiness and lag in these components of inflation.^[1] Economic Commentaries are brief analyses of issues with relevance for the Riksbank. They may be written by individual members of the Executive Board or by Riksbank staff. Staff commentaries are approved by the relevant head of department, while Executive Board members are themselves responsible for the content of the commentaries they write.

Published: 1 July 2024