Norway recorded core inflation of 3.3% y/y in March, as compared with 3.4% in February, and on par with consensus expectations of 3.3%. Norges Bank had expected core inflation to come in at 3.4%. Core inflation was pulled down by 0.2 percentage points by food prices. Meanwhile, rise in airfares accelerated core inflation by 0.2%. Both are due to Easter effects, which are expected to be reversed in April, according to Nordea Bank.
Meanwhile, growth of imported goods price decelerated, possibly indicating that the impact of the past weakness of the currency is also decelerating, added Nordea Bank. This is consistent with the opinion that inflation will soon decelerate in Norway, noted Nordea Bank. However, rents grew unexpectedly by 0.3% on monthly basis. One of the reasons for expected lower inflation was lower rent growth. Still, inflation is expected to decelerate going forward, said Nordea Bank.
At the moment, the central bank is unlikely to give any weight to slight below-expectated core inflation in March, added Nordea Bank. The central bank has mentioned that rate setting is not much influenced by news different from expectations now as compared to before.
