Inflation finds its way into every crevice of the economy, like a water leak that risks moisture damage to the entire house's foundation if it is not repaired in time.
Global production and supply bottlenecks began to emerge due to the pandemic.
Then Putin came and broke the pipes so the water gushed wildly.
Then we realized we had to call the plumber.
Stefan Ingves pulled out with his strongest pipe pliers.
But no matter how hard he pulled, and hit the pipes desperately, it didn't stop flowing.
It still sprays seemingly uncontrollably.
10.2 percent inflation in December, according to the KPIF measure that clears away how much more expensive it has become to pay the mortgage when the interest rate has been raised.
Dangerous spiral
If you also remove the effect of higher electricity prices, which in December rose by 29 percent (!) compared to November, the truly frightening figure remains: 8.4 percent underlying inflation.
It's the one my hairdresser contributes to when she raises her prices.
If we don't stop the spread effect, we are in a dangerous spiral where everyone ends up raising their prices as a precaution and then inflation becomes a completely self-playing piano.
A leak that will be impossible to stop unless we tear down the entire bathroom, replace all the pipes in the house, and set up construction fans to dry out the house frame while we are forced to evacuate the home.
Anyone who has been involved in a family exchange or a house renovation gone wrong knows what I'm talking about.
We don't want to get there.
House prices are falling
Speaking of housing, today we received the unsurprising news that housing prices continue to fall.
How far does it have to fall before it levels off?
Down 25 percent from the top?
Not unlikely.
In any case, it probably won't end until the interest rate hikes are over.
And today's inflation figure gave interest rate hawks grist to their mill.
The bathroom is still leaking badly.
So we should probably count on a flying start for the new Riksbank Governor Erik Thedéen, that he wants to show where the cabinet should be when he has now taken over the pipe wrench from Ingves.
At the beginning of February, he probably dreams of another 0.5 percentage point increase.
And threatening another small hit of 0.25 in April unless the waters show that it is beginning to give way.
Because scares, that's really the only thing he can do.
Lost salary increases
The interest rate increases do have an effect in the form of lowering our purchasing power and causing a recession.
But there is no cure for the basic problem: high electricity prices.
So the pipe wrench is a very blunt tool in this case.
Although you get a little respect for craftsmen with big stuff.
So the Riksbank wants us to believe that it will succeed in stopping the leak with its heavy tool, no matter how blunt it is.
Crucial now is to keep our expectations of future inflation low, as long as we believe they will succeed, there is a chance to save the house.
We can avoid raising prices "just because everyone else will".
But even if it goes so well, the bathroom has sustained permanent damage.
We've already lost almost a decade of real wage growth.
And even if inflation does give way, it only means that prices stop rising, not that they fall back.
Will my hairdresser cut the price 23.5 percent then again?
Will the slices that shrunk 18 percent in my bread package return to full size?
Would not believe it.
Higher prices are here to stay.
In ten years we may be relatively as rich again.
If the leak is stopped in time.
Otherwise... uh, it's Friday the 13th, but it's still Friday.
We don't want to think about the horror scenario now.
Nice weekend!