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Iceland Consumer Prices Rose 5.3% in December From Year Earlier

Dec. 21 (Bloomberg) -- Iceland’s annual inflation rate accelerated this month, adding pressure on the central bank to raise interest rates.

The inflation rate rose to 5.3 percent from 5,2 percent in November, Reykjavik-based Statistics Iceland said in a statement on its website today. Consumer prices rose 0.4 percent on the month.

The central bank this month kept rates unchanged after having raised twice this year, as the country emerged from its financial collapse in 2008. Policy makers lifted the rate a quarter point to 4.75 percent on Nov. 2 as they tried to shield the krona from market turbulence fueled by Europe’s deepening debt crisis.

The bank targets annual price growth of 2.5 percent. Iceland’s economy grew at the fastest pace since the second quarter of 2007 in the three months through September, the statistics office said on Dec. 7. Gross domestic product expanded a quarterly 4.7 percent, after shrinking 3.6 percent in the previous period, the office said.

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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