Inflation jump in Norway, Denmark adds to woes

OSLO: Nordic inflation developments worsened the risk of the region’s looming recession as consumer price growth in Norway and Denmark hit levels not seen in decades.

Norway’s inflation unexpectedly accelerated to 7.5% in October, the fastest pace since 1987, while economists in a Bloomberg survey had expected an increase to 7.1%. Price growth in Denmark rose to 10.1% in September – a 40-year high.

The data suggests a more gloomy outlook for the Nordic countries where soaring prices and borrowing-cost increases have slashed the confidence of both consumers and companies, eroding spending much like in other advanced nations.

It also adds to the risk that Sweden’s October inflation, due next Tuesday, may surprise negatively, raising pressure on the Riksbank ahead of its rate-setting meeting later this month. Clothing prices were the “the only upside surprise” in both countries’ data, Danske Bank A/S analyst Michael Grahn said, adding that may have implications for the upcoming Swedish data.

“Food was on the low side in both while furniture, transportation services, recreation and hotels/restaurants on average roughly as assumed,” he said.

Skandinaviska Enskilda Banken AB had cut its forecast for the Swedish economy to a contraction of 1.5% next year versus the previous view of little change, saying “rate hikes and cost crisis put extreme pressure on households.”