Swedish inflation falls in August, sets stage for more rate cuts
Swedish CPIF inflation falls 0.5% mo/mo, up 1.2% yr/yr
Outcome just below analysts forecasts
Inflation fall driven by lower energy prices
Riksbank seen cutting rates later this month
Recasts, adds analyst comment in paragraphs 8-9
STOCKHOLM, Sept 12 (Reuters) -Swedish inflation fell in August to land well below the Riksbank's target thanks to lower energy prices, setting the stage for the central bank to cut interest rates again later this month and ease further through the remainder of the year.
Consumer prices in Sweden, adjusted for rate changes, fell 0.5% in August from the previous month and were up 1.2% from the same month last year, the statistics office said on Thursday.
The August outcome was slightly below economists' average forecast, which was for a monthly fall of 0.4% and a year-on-year increase slowing to 1.3% from 1.7% in July. It was the third consecutive month of inflation below the Riksbank's 2% target.
"In August, inflation fell, which mainly can be attributed to lower energy prices," Caroline Neander, statistician at Statistics Sweden said in a statement.
Since peaking at over 10% in 2022 during a global inflation surge consumer price growth in Sweden has fallen steadily prompting the central bank to cut its key rate for the first time in around eight years in May.
The Riksbank cut its key rate again to 3.50% from 3.75% on Aug. 20 and said it expected to ease policy two or three times more before the end of the year, a slightly faster pace than previously forecast by the bank.
The August inflation report was the last before the Riksbank's next rate announcement on Sept. 25.
"This doesn't change our assessment that the Riksbank will cut its key rate by 25 basis point at the end of September. However, it may increase speculation of a double cut at that meeting," Lars Kristian Feste, head of fixed income at Ohman Fonder, said.
"We still see a total of a further three cuts from the Riksbank during the remainder of the year."
Reporting by Niklas Pollard, editing by Terje Solsvik and Tomasz Janowski
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