Swedish inflation surges to new high in April

STOCKHOLM, May 12 (Reuters) – Swedish headline inflation surged higher in April as the lingering effects of the pandemic and the war in Ukraine pushed up prices across the board, figures published on Thursday showed.

Consumer prices, measured with a fixed interest rate, rose 0.6 percent in April from the previous month and were up 6.4 percent from the same month last year, the statistics office (SCB) said.

Analysts had forecast headline inflation of 6.2% on the year.

The central bank targets 2 percent CPIF inflation.

The last time headline inflation was higher was in December 1991.

Sweden’s central bank has been caught by surprise by the strength and persistence of price increases. In February, the Riksbank said it would not need to raise rates until 2024, only to do a U-turn at its most recent meeting.

It hiked by a quarter percentage point at the end of April and said two or three more hikes were likely this year, with the tightening cycle to continue in 2023. 

Many analysts believe the Riksbank will have to move even faster. 

Five year inflation expectations hit 2.4% in May, indicating markets see inflation remaining higher for longer than the central bank would like.