Sweden's economy will enter a deeper and longer recession next year than previously forecast as rising energy prices cause inflation, hitting households and businesses, the country's finance ministry said, Reuters reported.

Sweden's gross domestic product is now expected to shrink by 0.7 percent in 2023, down from November's forecast of a 0.4 percent decline, and overall inflation is forecast at 6 percent next year, down from the 5.2 percent seen previously.

"I said in October that Sweden was heading towards an economic winter and what we see now is that the winter looks to be more protracted than we thought," Finance Minister Elisabeth Svantesson told a news conference. "The weak development ... looks like it won't bottom out until 2024," she said.

The ministry predicts that the economy will now grow only 1 percent in 2024, up from 2 percent previously seen, before recovering to 2.7 percent in 2025.

Swedish households have become increasingly gloomy in recent months due to rampant inflation, rising mortgage costs and record high energy prices. Consumer confidence was close to a record low in November.

The nation's central bank has raised interest rates four times this year to 2.50 percent to combat rising inflation. The November CPIF, the inflation target for the Riksbank, was 9.5% in November, well above the 2% target.