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Higher cost of living forces Swedes to cut back on alcohol

The slumping economy has had a knock-on effect on Swedes' alcohol consumption, new figures show.

Published: 15 March 2024 12:46 CET

Higher cost of living forces Swedes to cut back on alcohol

Alcohol consumption is steadily declining in Sweden, having dropped by around 10 percent since 2014. Photo: Ari Luostarinen/SvD/TT

Alcohol consumption fell the most in nearly a decade in the Nordic country, excluding the 2020 pandemic, research showed on Friday.

Alcohol consumption among people above the age of 15 fell to 8.6 litres per capita in 2023, according to the Swedish Council for Information on Alcohol and Other Drugs (CAN).

It was down 2.7 percent from 2022, the biggest annual drop since 2014 when excluding 2020.

“This shows that the economic situation in 2023 has also influenced the buying of alcohol,” Björn Trolldal, a researcher at CAN, said in a statement.

“The depreciation of the Swedish krona and the increase in fuel prices has affected imports,” the researcher told AFP.

As a result, Swedes bought less alcohol from Germany, which accounts for 50 percent of total imports, he added.

The country’s economy shrank by 0.3 percent in 2023, one of the weakest performers in the European Union, as the central bank raised rates to battle soaring inflation.

Sweden has an alcohol distribution monopoly, meaning that apart from bars and restaurants Swedes can only buy beverages with an alcohol-level above 3.5 percent at state-run outlets called Systembolaget, and authorised retailers in rural areas.

Systembolaget accounted for around 71 percent of total consumption in 2023, up from 64.8 percent in 2019, according to the study.

Alcohol consumption is steadily declining in Sweden, having dropped by around 10 percent since 2014.

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Inside Sweden: What's in store for the economy after interest rate cut?

Sweden was one of the first countries in the western world to lower its interest rate this week, following Switzerland and some smaller markets such as the Czech Republic and Hungary.

The Swedish central bank, the Riksbank, this week slashed the country’s main interest rate from 4.00 to 3.75 percent – a move that was partly expected, and partly came as a surprise.

Expected, because the bank had previously said that it would most likely cut the rate in May or June, with many experts believing it would happen in May on the back of falling inflation.

A surprise, because it beat both the US Federal Reserve and the European Central Bank to it, and Sweden’s inflation rate is still higher than that of its Nordic neighbours Denmark and Finland.

But there are a few reasons why it makes sense that Sweden is among the first ones out.

Swedish GDP has been on the decrease for four consecutive quarters. Unemployment has been increasing more than in a lot of other countries, as have bankruptcies, reported the TT newswire.

But above all, Swedish households are very sensitive to interest rate fluctuations, so although the state economy is generally strong, individual households have been hit hard by the high rates.

I talk on the latest episode of The Local’s Sweden in Focus podcast about how a few years ago, Swedish interest rates were very low. This meant that a lot of households signed up for high debts and mortgages that they struggled to pay after interest rates started climbing high again.

What’s in the pipeline for the Swedish economy?

The Riksbank expects to lower the interest rate another two times this year, saying that inflation measured according to the CPIX metric (ignoring mortgages) is close to its two-percent target.

That said, it points out that the long-term forecast for inflation is uncertain. Geopolitical instability, the strong US economy and the Swedish krona could make inflation rise again, warns the bank.

You should not expect another cut to the interest rate next month, but possibly further ahead.

Sweden’s labour market is expected to keep struggling a while longer with high unemployment, but the state of the gross national product (GDP) is expected to slowly improve. We’re also already seeing signs that the Swedish property market is starting to come back to life.

In other news

The Local reported the interest rate announcement as soon as it was out on Wednesday. We also published this guide to three ways the lower rate could boost your own personal finances.

Many banks have already started lowering their mortgage rates in response to the Riksbank’s announcement. We’ve got the latest list of which Swedish banks offer the cheapest mortgages.

The Eurovision Song Contest final is set to be held tonight in Malmö, with another big demonstration to protest against Israel. The first of the two major protests scheduled for the week drew around 10,000-12,000 participants and was calm and peaceful, said police.

I’m hoping to plant my zucchini outside this weekend. In Sweden in Focus Extra, gardener and TV host John Taylor gives his best tips for getting the best out of your Swedish garden.

As many as 70 percent of internationals want to stay in Sweden but only 40 percent end up doing so. What can be done to improve this figure?

Many foreigners living in Sweden want to stay in the country but struggle to find a job, despite having relevant qualifications. The Local spoke to three experts for their advice.

Thanks for reading and have a good weekend.

Best wishes,

Emma

Inside Sweden is our weekly newsletter for members which gives you news, analysis and, sometimes, takes you behind the scenes at The Local. It’s published each Saturday and with Membership+ you can also receive it directly to your inbox.

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