Norway’s underlying inflation unexpectedly accelerated to a record-high pace last month, suggesting the central bank is more likely to prolong its interest rate-hiking campaign beyond the summer.

The pace of core inflation, the measure followed by Norges Bank, rose 6.7% in May from a year earlier, compared with the 6.3% forecast by analysts in a Bloomberg survey and a central bank’s estimate of 6%. The headline inflation rate was also higher than expected.

The data compounds the challenges faced by the Norwegian households — the world’s most indebted — and the nation’s policymakers who have been caught out by a weaker-than-expected krone which fuels imported price growth. It will likely boost bets that Norges Bank will flag more rate hikes after one expected later in June from the current level of 3.25%, with an increasing number of forecasters seeing the rate peak at 4% later this year.

“With the magnitude of this surprise it seems fair for markets to almost fully price a third 25bp hike in September now,” said Kristoffer Kjaer Lomholt, head of FX research at Danske Bank A/S in Copenhagen. “The risk of 50bp in June has risen but we still think the bar is high for Norges Bank to revert to 50bp hikes given how inflation expectations are more stable.”

--With assistance from Joel Rinneby.