Norway’s consumer price index rises in July; Norges Bank likely to stand pat in September

Norway’s consumer price index continued with its upward trend in July. The CPI rose 0.6 percent month-on-month in July. On a year-on-year basis, the index rose 4.4 percent, mostly because of higher electricity prices. The year-on-year rise was 0.7 percentage points higher than in June, noted Statistics Norway. The month-on-month rise was due to a strong increase in food prices. Food prices rose for the fourth straight month in July.

Core inflation also rose robustly in July thanks to solid rise in airfares, food prices and very moderate price cuts on shoes and clothes. Core inflation in July came in at 3.7 percent year-on-year, up from 3 percent in June. Consensus projection was 3.1 percent.

Airfares pulled up the year-on-year rise by nearly 0.3 percentage points in July as compared to June, clothes 0.1 percentage point and food close to 0.2 percentage points. Also, health services prices pulled up almost 0.1 percentage point.

Core inflation came in 0.8 points more than Norges Bank’s forecast. Running inflation would give a considerable contribution in lifting the rate path.

“The figure clearly strengthens our view that Norges Bank will be on hold in September,” said Nordea Bank in a research note.