Jan. 4 (Bloomberg) -- Swiss inflation unexpectedly accelerated to the fastest pace in more than 12 years in December, led by higher energy costs.

Consumer prices increased 2 percent from a year earlier after rising 1.8 percent in November, the Federal Statistics Office in Neuchatel said today. That's the highest rate since October 1995. Economists forecast it would be unchanged, according to the median of 14 estimates in a Bloomberg News survey.

A surge in oil prices to a record $100.09 a barrel yesterday is pushing up inflation just as a drop in the franc makes imports more expensive. Switzerland's central bank said last month it expects slowing economic growth to help curb price increases. The Swiss National Bank kept its key rate unchanged for the first time in two years last month at 2.75 percent.

``I'm a little bit shocked,'' said Janwillem Acket, chief economist at Julius Baer Holding AG in Zurich. ``There are risks that we'll see inflation rates of 2.5 percent in coming months, increasing pressure on the SNB to raise interest rates further.''

From the previous month, consumer prices rose 0.2 percent.

The Swiss currency traded at 1.6373 against the euro after the release. It fell to 1.6386 at 11:21 a.m. in Zurich from 1.6385 yesterday, bringing gains to 6 percent over the past two years. Against the dollar, the franc fell to 1.1142 from 1.1109.

`Temporary' Gain

The franc has been pushed lower partly as investors put on carry trades, borrowing at Switzerland's main lending rate and converting the proceeds into a currency they can lend out for a higher return. At 2.75 percent, Swiss borrowing costs are still among the lowest in the world after Japan's 0.5 percent key rate.

Adding to the SNB's inflation concerns, crude oil prices have gained 78 percent over the past year, trading at $99.19 a barrel today. SNB President Jean-Pierre Roth said Dec. 13 that rising energy prices will ``likely'' push inflation above the bank's 2 percent limit in the first half of 2008 for the first time in almost 13 years. He called the gain ``temporary.''

In December, prices of crude oil products rose 22 percent from a year earlier and 1.3 percent from November, today's report showed. Heating oil prices surged 35 percent in the year. Imported consumer goods cost 4.1 percent more than a year earlier.

Core inflation excluding volatile costs such as food, beverages, tobacco and oil rose 0.9 percent in the year.

Clariant, Nestle

Some companies are passing on higher costs, increasing the risk of more entrenched inflation. Clariant AG, the world's second-largest maker of specialty chemicals, based in Muttenz, Switzerland, said Nov. 26 it will raise prices by up to 12 percent to recoup rising costs for oil-based raw materials and energy.

Nestle SA, the world's largest food company based in Vevey, expects a ``stronger impact of commodity prices'' on the cost structure in the first half of this year, Chief Executive Officer Peter Brabeck-Letmathe said Nov. 21.

For now, the SNB expects slowing economic growth to damp price increases. Swiss manufacturing growth slowed more than economists expected in December, led by a drop in companies' backlog of orders, while output growth stalled. Swiss leading economic indicators fell for a fifth straight month in December.

Growth may slow to 1.9 percent this year from 2.8 percent in 2007, the State Secretariat for Economic Affairs said last month. The fastest rate the Swiss economy can expand without pushing up inflation, the so-called potential rate, is about 2 percent, according to the Organization for Economic Cooperation and Development in Paris.

In 2007, consumer prices rose 0.7 percent on average, the statistics office said today. Inflation may average 1.7 percent this year and 1.5 percent in 2009 before reaching 1.6 percent by the third quarter of 2010, the SNB said. By comparison, inflation in the economy of the 13 euro nations held at 3.1 percent in December, the European Union's statistics office said today.

``We'd need a substantial weakening in economic growth to push down inflation,'' Julius Baer's Acket said. ``I have my doubts. If they raised the key rate twice more to 3.25 percent, they'd still be at a neutral level'' without hurting growth.

To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net.

Last Updated: January 4, 2008 05:40 EST