With inflation at record highs, Sweden rediscovers poverty

Hit by inflation that has been at its highest level for more than thirty years and on the brink of recession, Sweden is seeing increasing signs of poverty against a backdrop of rising inequality in recent years.

"As you can see, a lot of people came for breakfast," says Kavian Ferdowsi, who initiated the food distribution. "In the thirteen years that I have been in charge of this association for the homeless, I have never had so many people, I see more and more people just looking for a little help," he told AFP.

The repercussions of the war in Ukraine combined with rising interest rates and falling property prices that are putting pressure on the finances of many indebted households make the Swedish economy one of the most worrisome in Europe.

After a surge in electricity prices at the beginning of winter, it is now food prices that are panicking with a 20% increase over one year, unseen since the 1950s.

The government announced on Wednesday a meeting soon with Sweden's three major supermarket chains to tell them that any unjustified increase is "unacceptable".

After peaking at 12.3% in December, general inflation is struggling to slow despite the central bank's sharp rate hike. After slowing slightly in January, it even rose unexpectedly in February, to 12%, according to statistics published Wednesday.

"The first wave of inflation was just energy prices and some imported goods. But then it spread to the whole economy," said Annika Alexius, an economist at Stockholm University.

Unsold supermarkets are offered for sale at discounted prices at a Red Cross branch on March 14, 2023 in Stockholm © Jonathan NACKSTRAND / AFP

The poorest households in the country are the most affected, but also the middle classes among the most indebted in Europe and facing a sudden increase in their real estate bills, she told AFP.

In a Red Cross office in the Swedish capital, unsold supermarkets are offered for sale at discounted prices.

Marianne Örberg, a 73-year-old pensioner, comes here twice a week. In his basket of the day, a bunch of radish, a few pieces of bread. If she wants to make it clear that she is not the most to complain, she also explains that she seeks not to burden her savings.

Recession in 2023

"People have changed their eating habits. We eat differently today to keep accounts and initiatives like these are very, very, appreciable," says the former lawyer.

Red Cross officials, on the other hand, see the face of the people who come changing.

A customer at the Red Cross branch on March 14, 2023 in Stockholm © Jonathan NACKSTRAND / AFP

"Before, we basically only saw people living on the margins, now it's changed. They are also families with children, elderly people or people on sick leave, all struggling to make ends meet," its secretary-general in Sweden, Martin Ärnlöv, told AFP.

In low-income Swedish single-parent families, nearly one in eight households say they struggle to feed their children and experience hunger, according to a survey commissioned by the organization.

Long one of the most egalitarian countries in the world, Sweden has seen wealth gaps rise sharply over the past three decades, the result of reforms that have straightened out public accounts and brought out new champions of the European economy, but weakened many Swedes.

According to the national statistical office, nearly 15% of Swedes are at risk of poverty, i.e. below 60% of the median income which is around 33,200 crowns (2,950 euros) per month.

According to the European Commission's latest forecasts, Sweden would be the only EU country to experience a recession in 2023.

The currency, the krona, is suffering on the foreign exchange market and calls are multiplying to strengthen social assistance in a country where the welfare state remains a safety net.

Unsold supermarkets are offered for sale at discounted prices at a Red Cross branch on March 14, 2023 in Stockholm © Jonathan NACKSTRAND / AFP

But for economist Annika Alexius, the country could especially foreshadow a tough year throughout Europe.

"Let's say that we are a little ahead of other European countries in this recession. Other European countries will also face a worsening situation," she said.

© 2023 AFP