Headline inflation 3.3 vs forecast 3.1
Key exenergy figure 4.4, in line with expectations
Analysts see first rate cut in midyear

STOCKHOLM, Feb 19 Reuters Headline Swedish inflation picked up pace as expected in January, data showed on Monday, and if the increase proves temporary it is unlikely to derail the central bank39;s plans to begin cutting interest rates in midyear.

Consumer prices in Sweden, measured with a fixed interest rate, fell 0.3 in January from the previous month and were up 3.3 from the same month last year, the statistics office SCB said.

Stripping out volatile energy prices, inflation was 4.4.

The numbers were broadly in line with expectations of the Riksbank and analysts.

We still see inflation falling in the coming months and becoming too low later this year, Nordea economist Torbjorn Isaksson said. We stick to our forecast that the Riksbank will cut rates in May.

Headline inflation had been expected to pick up due to base effects, mostly energy prices

The central bank targets 2 CPIF inflation.

The pace of inflation has dropped sharply since climbing to over 10 at the end of 2022 and after two years of rapid policy tightening, the Riksbank said it could start to cut rates from the current 4.00 soon possibly as early as next month, although May or June are seen as more likely.

However, policy makers are likely to proceed cautiously.

The Riksbank remains concerned the downward trend in inflation could reverse with geopolitical tensions,…