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(Bloomberg) -- Sweden’s core inflation defied forecasts by accelerating for a second straight month, strengthening the chances that the Riksbank will call an end to its easing campaign.

A measure of annual price increases excluding energy rose to 3% last month, the fastest pace in nine months, Statistics Sweden said on Thursday, citing a preliminary estimate. The outcome was above all forecasts in a Bloomberg survey of analysts that had a median of 2.7%, while the Riksbank had expected a 2.4% gain.

The krona — the best performer this year in the G-10 sphere of major currencies — hit its highest level since December 2022 following the news. It traded 0.5% higher at 10.9527 versus the euro at 10:04 a.m. in Stockholm.

The Swedish officials have been at the forefront of the global reduction in monetary restraint with 175 basis points of benchmark rate cuts to 2.25%. Thursday’s data is likely to reduce the chances of another rate cut later this year that’s been a consensus view in the market even after a similar jump in January price growth.

“Our forecast for a final rate cut in May was under pressure already before today’s inflation surprise,” SEB AB’s analysts Olle Holmgren and Amanda Sundstrom said in a note to clients. “In light of today’s numbers, we change our forecast and now predict the Riksbank to stay on hold going forward.”

Governor Erik Thedeen and his colleagues have in past months focused on helping the largest Nordic economy to start a clearer rebound after three years of stagnation. The central bank’s business survey published earlier this week showed little change from the autumn, stating that “activity is weak in most parts of the economy.”

Recent data have been inconclusive, with economic output in the fourth quarter surprising with the fastest pace in 2 1/2 years, while there’s also been evidence of a weaker labor market and a dimming of consumer sentiment.

Money markets now price six basis points of interest rate cuts by Riksbank until August, compared to 11 basis points on Wednesday.

The CPIF rate of inflation that the Riksbank targets also rose more than analysts and the Riksbank expected, to 2.9% in annual terms, the second time in nine months that the reading exceeded 2%.

“Inflation will by all accounts be much higher than expected this year and the Riksbank’s forecast is due for a large revision,” Swedbank AB’s analyst Carl Nilsson said in a note. “Consequently, prospects for a rate cut in the near term are small.”

The view is not equally shared by all economists, with some pointing to temporary factors raising prices in the biggest Nordic economy.

What Bloomberg Economics Says:

“The February surge in Sweden’s headline inflation is more temporary pain rather than a shift in trend – price gains will ease sharply toward 2% in coming prints. This will help the Riksbank keep its focus on the weak recovery in domestic demand which will likely set the scene for another rate cut in the coming quarter.”

— Selva Bahar Baziki, Sweden economist. Read more here

“So far we judge that our long-standing view of underlying inflation staying somewhat above 2% in 2025 remains a valid depiction of the inflation situation,” Svenska Handelsbanken AB’s head of forecasting, Johan Lof, said in a note to clients.

“However, there are still several signs that price- and wage-setting remains different from before the inflation crisis – the genie is out of the bottle,” he said. “All told, the jury is still out and the decisive evidence will come when the next inflation shock hits.”

--With assistance from Joel Rinneby, Vassilis Karamanis and Christopher Jungstedt.

(Adds analyst comments, updates markets from third paragraph.)