Bloomberg News

Iceland’s Inflation Rate Slows for a Second Consecutive Month

November 25, 2011

Nov. 25 (Bloomberg) -- Iceland’s inflation rate fell for a second consecutive month in November, easing pressure on the central bank to raise interest rates.

Inflation slowed to 5.2 percent in November from 5.3 percent the prior month, Reykjavik-based Statistics Iceland said today in a statement on its website. Consumer prices were unchanged on the month, the office said.

The central bank this month raised rates for the second time since its banking industry collapsed almost three years ago. Policy makers lifted the rate a quarter point to 4.75 percent on Nov. 2 as they also tried to shield the krona from market turbulence fueled by Europe’s deepening debt crisis.

The bank, which targets annual price growth of 2.5 percent, this month raised its forecast for economic growth in 2011 to 3.1 percent from 2.8 percent previously.

“Inflation will rapidly recede after January for the first half of next year,” Ingolfur Bender, head of research at Islandsbanki hf, said in a note to clients before the release. The lender expects inflation to slow to 4 percent by the middle of next year and to 3.5 percent by the end of 2012 and 2.9 percent by the end of 2013, he said.

--Editors: Jonas Bergman, Tasneem Brogger

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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