Swedish retail sales, lending to households drop

Swedish retail sales, lending to households drop

The Swedish retail sales and lending to households hit new lows as consumers in the largest Nordic economy continue to pull back spending.

Retail sales fell 11.6% in March from a year earlier the biggest slump on record dating back to the beginning of 1990s, data from Statistics Sweden showed on Friday.

Lending to households in the same month grew 2.3% on year, the slowest pace since 1996.

The data adds evidence of the fallout from higher prices and sharply rising borrowing costs, illustrating that “consumers and housing are the losers in the Swedish economy,” Danske Bank’s Swedish chief economist Michael Grahn said. In its efforts to curb inflation, the country’s central bank has raised its benchmark rate to 3.5% from zero in the space of a year. 

Nordea Bank AB’s economist Torbjorn Isaksson called the retail sales data “awful” and noted, in a tweet, that the slump could also be a bad sign for employment, which has held up relatively well so far.

Also suffering from one of deepest housing slumps globally, Sweden is set to undergo the worst economic contraction in the European Union this year, according to OECD forecasts.

Still, it managed to narrowly evade a recession in the first quarter, suggesting that the economy is still quite resilient.

The spending drop was led by a 14.2% decline in sales of durable goods, while trade in groceries excluding alcohol declined by 8.9%, the statistics authority said.

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