The Riksbank published a staff memo by Nicoletta Batini analysing how energy price shocks have affected Swedish household consumption, concluding that the 2022–2023 surge in energy costs following disruptions to Russian energy flows was a key driver of the sharp swings in spending. The analysis finds the effects were especially pronounced for durable goods and that, despite tentative signs of recovery during 2024, the drag from energy price shocks turned negative again in the last quarter of 2024. Using Bayesian-estimated structural models, the memo links energy supply shocks to deteriorating household purchasing power and weaker consumption across components, with particularly strong impacts on durables where purchases can be postponed. It also highlights sizeable effects on non-durable consumption, consistent with spillovers from higher energy costs into food prices and other essentials. Model-based historical decompositions indicate that energy shocks played a smaller role during the 2020 pandemic period than after 2022, and that while energy-related contributions to consumption growth were positive on average across 2024, they reversed by Q4 alongside a marked fall in the terms-of-trade proxy (down 2.5% in Q4 2024).
Riksbank 2025-04-23
Sweden's Riksbank staff memo links the 2022–23 energy price shock to sustained weakness in private consumption
The Riksbank memo by Nicoletta Batini analyzed energy price shocks' impact on Swedish household consumption, highlighting the 2022–2023 energy cost surge's significant influence. Using Bayesian-estimated structural models, the study found pronounced effects on durable goods consumption and noted a reversal in energy-related contributions to consumption growth by Q4 2024. It also observed spillover effects on non-durable consumption due to rising food and essential costs.