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Swedish inflation hits fastest pace since 2008 in Sept

  • Headline inflation 2.8% vs yr earlier
  • Highest since Oct. 2008
  • Analysts had forecast even increased inflation fee
  • C.financial institution targets 2.0% inflation
  • Riksbank sees overshoot as short-term

STOCKHOLM, Oct 14 (Reuters) – The pace of headline inflation in Sweden picked as much as its highest stage in greater than a decade in September, knowledge printed on Thursday confirmed, although the central financial institution is unlikely to react until worth pressures grow to be persistent.

Consumer costs in Sweden, measured with a set rate of interest, rose 0.5% in September from the earlier month and have been up 2.8% from the identical month final yr, the statistics workplace (SCB) mentioned.

The central financial institution targets 2% CPIF inflation.

It was the very best fee of headline inflation since October 2008, although under a forecast of three.0% in a Reuters ballot and an analogous forecast by the central financial institution.

“The lower-than-expected September reading shaves off some upside risks to our (inflation) forecast,” Nordea economist Torbjorn Isaksson mentioned in a notice. “We expect the Riksbank to keep the repo rate unchanged at zero in the coming years, while the balance sheet may be reduced in 2022.”

Sweden’s financial system recovered rapidly from the pandemic and virtually all restrictions have now been lifted, arguing for development to stay robust, regardless of a blip in GDP in August.

Inflation has been selecting up, primarily as a result of vitality costs, but additionally bottlenecks and shortages attributable to the pandemic and its aftermath.

The Riksbank forecasts inflation will prime 3% on the finish of this yr. However, inflation expectations are well-anchored across the 2% goal and the central financial institution expects headline figures will ease again once more, that means policy-makers shouldn’t have to react in the quick time period.

The central financial institution’s expects to carry its stability sheet unchanged subsequent yr and for the benchmark repo fee to stay at 0% till no less than the ultimate quarter of 2024.

Some policy-makers have mentioned a hike may come earlier, whereas additionally suggesting that there may additionally be scope to shrink the stability sheet in 2022.

Reporting by Simon Johnson; modifying by Niklas Pollard and Toby Chopra

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