STOCKHOLM, Oct 13 (Reuters) – Headline inflation in Sweden hit a new milestone in September, jumping to 9.7%, the statistics office (SCB) said on Thursday, making it likely that the central bank will deliver another hefty rate hike at its next policy meeting.
Boosted by electricity and food, consumer prices in Sweden, measured with a fixed interest rate, rose 1.1% in September from the previous month. Excluding volatile energy prices, inflation was 7.4% measured against a year earlier.
Headline inflation was running at the highest pace since June 1991 when it hit 10.1%. The highest figure recorded by the SCB, whose record goes back to 1988, was 12.7% in February 1991.
The central bank targets a consumer price inflation rate based on a fixed interest rate, or CPIF, of 2%. It announces its next policy decision on Nov. 24.
“We view risks as tilted towards a larger rate hike than indicated by the rate path, due to the weak SEK (Swedish crown) and prospect of a more hawkish ECB,” Swedbank said in a note. “Therefore, we maintain our call of a 75 bp rate hike in November, to 2.50%.”
Spurred by the war in Ukraine and the lingering effects of the pandemic on supply chains, prices for energy, food and clothing and a range of other goods and services have soared this year prompting central banks to tighten policy sharply.
The Riksbank hiked by a full percentage point in September to 1.75%, its third hike of the year, despite worries that the economy is already slowing sharply.
The central bank is set to hike again in November – its forecast is for a half percentage-point – and again at the start of next year as it attempts to stop high prices spilling over into higher wages, creating a self-reinforcing spiral.
Analysts had forecast headline inflation of 9.3% in September. The Riksbank’s forecast was 9.68%.
(Reporting by Simon Johnson, editing by Stine Jacobsen and Emelia Sithole-Matarise)
