(Bloomberg) -- Sweden’s core inflation rate rose in November to its highest level in six months after the Riksbank decided to increase the pace of interest-rate cuts to support the ailing economy.
A measure of annual price increases that strips out energy increased to 2.4% last month, Statistics Sweden said on Thursday, citing a preliminary estimate. The outcome — the highest since May — was in line with the median estimate of analysts surveyed by Bloomberg, while the Riksbank’s projection was for a slowdown to 2%.
The data comes as the Swedish policymakers last month delivered their largest key rate cut in a decade with a half-point reduction to 2.75%. They also signaled then that further moves lower are possible at their meeting in less than two weeks and in the first half of next year.
“Once again inflation surprised on the upside compared to our forecast and came out above the Riksbank’s view,” Nordea Bank Abp economist Torbjorn Isaksson said in a note.
In November, the CPIF rate of inflation that the Riksbank targets was 1.9% in annual terms, also matching analyst expectations and marking the sixth month in a row of readings under 2%.
With consumer price increases dropping below that level in the past months, the rate-setters are focusing on helping the Nordic economy exit a stagnation that has lasted for about three years. Recent data including revisions to past periods suggest the developments this year have been better than feared, and that output returned to growth in the third quarter.
Bloomberg economist Selva Bahar Baziki said in a note that the jump was mostly due to temporary factors and she still sees the Riksbank cutting by 25 basis points at this month’s meeting.
“We expect the underlying details in the inflation data to support our rates outlook of three consecutive 25-bp cuts, starting in the last meeting of the year in about two weeks,” Bahar Baziki wrote in the report.
--With assistance from Joel Rinneby.
(Updates with reaction from economists.)
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