Central bankers looking for somebody to blame for persistent price pressures have a new target: Beyoncé.
Economists at Danske Bank believe that the singer’s decision to start her world tour in Stockholm in May led to a surge in local hotel prices that in turn meant Swedish inflation exceeded expectations.
Fans from around the world flocked to the Swedish capital for the opening two sold-out concerts of Beyoncé’s Renaissance tour last month, with anecdotal evidence suggesting many of the 46,000 attending each night had to stay well outside of Sweden’s capital and at highly elevated prices.
Sweden Statistics said on Wednesday the annual core measure, which excludes changes in energy prices, had fallen just 0.2 percentage points between April and last month to 8.2 per cent. That was a smaller margin than economists and the central bank had hoped.
“Beyoncé is responsible for the extra upside surprise this month. It’s quite astonishing for a single event. We haven’t seen this before,” said Michael Grahn, Danske’s chief economist in Sweden, who estimated the singer caused 0.2 percentage points of the rise.
Sweden Statistics said restaurants and hotels added 0.3 percentage points to the May figure, while recreation and culture contributed 0.2 percentage points.
Economists said they expected the effects to unwind this month. But some such as Andreas Wallström, head of forecasting at Swedbank, worried about the next big concert in Sweden — three nights of Bruce Springsteen in Gothenburg at the end of July — having a similar effect.
Beyoncé — famous for hits such as “Halo”, “Crazy in Love” as well as “Bills, Bills, Bills” when part of Destiny’s Child — is touring for the first time in seven years, sparking huge demand for tickets in Europe and from next month the US.
US websites were filled with tales of Americans travelling over to Sweden to take advantage of the weak Swedish krona and significantly cheaper ticket prices than back home.
Tickets for the Stockholm concerts sold with a face value of between SKr650-Skr1495 each ($60-140). For her Las Vegas shows, Ticketmaster prices for standard admission vary from $91 to $689. In other US cities, resale tickets are selling for several multiples of those amounts.
The Riksbank was one of the last western central banks to start lifting interest rates, only moving away from zero lower bound in May last year. Its benchmark rate is 3.5 per cent and most economists such as Grahn expect two more hikes this year as it tries to lower headline inflation to its target of 2 per cent.
The consensus expectation for Swedish core inflation in May was 7.8 per cent. The Riksbank forecast a figure of 8.1 per cent.
Beyoncé’s Renaissance tour moved from Stockholm through several European capitals including Brussels, Cardiff, Edinburgh and five nights in London. She has seven more dates in Germany, the Netherlands and Poland before moving to Canada and the US. Her impact has yet to show up in any of the other countries’ inflation data, however.
Large sporting tournaments often skew economic statistics but economists said it was rare for a single event to do so.
Source: Economy - ft.com
