Sweden’s core inflation rate unexpectedly increased for the first time in more than a year in May, in a setback for the Riksbank after it started reducing borrowing costs.
A price measure that strips out energy costs and the effect of interest-rate changes rose 3% from a year earlier, according to data published by Statistics Sweden on Friday. That was higher than the median estimate of 2.6% in a Bloomberg survey of analysts as well as the central bank’s 2.9% forecast.
While some of the increase in prices could be explained by an increase in accommodation prices as Taylor Swift fans flooded the nation’s capital for three concerts, prices of clothing, food and travel also increased. Hotel prices rose by 11% from April, the biggest monthly increase since May 2019, and larger than May last year, when two Beyoncé shows in the capital attracted some 100,000 spectators.
The reading comes as subsiding price pressures have prompted the Swedish central bank to embark on a path toward monetary-policy easing. The Riksbank cut its benchmark rate to 3.75% from 4% in May and has said it expects to reduce borrowing costs twice more before year-end.
The easing moves are set to provide much-needed fuel to a sluggish Swedish economy, which is widely seen as more sensitive to interest-rate changes than many peers’, as most household mortgages have rates fixed on short terms.