STOCKHOLM, Dec. 7 (Xinhua) -- The Swedish capital is abuzz with people walking past shop windows with Christmas decorations. But their warm jackets that protect them from the cold weather offer little help for the "economic winter" for which they have been told to brace.
"We will not buy as many Christmas presents as in previous years. We will probably spend around 30 percent less," shopper Petra Johansson told Xinhua recently.
"This is, of course, something no child wants to hear, but I hope they understand," she said, looking at her daughter Julie accompanying her on the shopping trip.
"Yeah, I do," the nine-year-old nodded in resigned approval.
Statistics Sweden said last month that the country's gross domestic product (GDP) decreased by 0.3 percent in the third quarter (Q3) from Q2, following a 0.8 percent decrease in Q2 from Q1 - drops in two consecutive quarters, which signal economic recession.
Jessica Engdahl, head of section at Statistics Sweden's (SCB) National Accounts Department, said that "Household consumption expenditure was negative for the fifth consecutive quarter."
A rate of inflation not seen for decades has persisted for well over a year now, prompting the central bank to gradually increase the policy rate to 4 percent -- a level not seen since 2008 -- and these economic factors together have placed households and businesses in a vice-like grip.
Many other Swedish families have similar plans to cut down on spending, according to HUI Research, an institute providing statistics, analyses and prognoses for the retail sector.
In a report released ahead of Christmas, HUI Research said that the average household is expected to spend 3 percent less on presents and food this year compared to 2022.
Their shopping bags will, however, shrink considerably more than that as the 3 percent figure does not account for the effects of inflation, which in October stood at 6.5 percent year-on-year, according to Statistics Sweden.
The prices of traditional Swedish Christmas foods, such as ham, pickled and cured fish, chocolate and oranges, have increased considerably more than that, the same government agency said in a press release dated Dec. 5.
The price of pickled herring was up 25 percent year-on-year, while smoked and cured salmon costs 32 percent more and oranges 72 percent more, the SCB said.
Christmas food is, however, not something that the Johansson family is willing to compromise on.
"It will be like any other Christmas, but then we usually don't have that many dishes anyway," Petra Johansson told Xinhua.
Looking back on more than a year of persistent inflation, shopping for Christmas food is just the same as shopping on any other day of the year, she said.
"Food in general has become considerably more expensive, especially with three hungry children to feed," she said.
To make matters worse, the Johanssons belong to the around 40 percent of the Swedish households who live in detached houses.
"I just hope that energy prices will not soar as they did last winter," Johansson said.
The consequences were so dire that the government decided to pay out compensation for excessive bills to households and businesses to mitigate the worst effects.
Despite having a fixed interest rate for most of their mortgage, the Johanssons have also felt an increasing burden for borrowing costs since the central bank (Riksbank) started raising the policy rate in May last year following over seven years with it being zero or below.
Also, those renting their homes have felt a similar pressure, as landlords for two consecutive years have demanded rent increases far higher than in previous years, citing interest rates and increased costs.
But despite housing companies and other businesses trying to compensate for higher costs, and thus fanning inflation, many of them have fallen on hard times.
The number of bankruptcies has risen to the highest level in a decade as nearly 5,500 businesses went bankrupt during the period January through August, according to statistics released by credit reference agency UC.
The year-on-year increase of 35 percent bankruptcies was seen across all business sectors, UC said in a press release.
Building and construction was the business sector with the highest number of bankruptcies, just over 1,000, the UC said in the press release.
The increased number of bankruptcies is also reflected in the unemployment figures, which the Riksbank expects will increase from 7.5 percent last year to 7.7 percent this year before peaking at 8.6 percent in 2024.
Compared with some of their friends nervous of losing their jobs, Petra Johansson and her husband, both civil servants, do not feel the pressure for now, Johansson told Xinhua.
