In February, Norway’s core inflation accelerated to 3.4% from January’s 3%. However, inflation is likely to have decelerated slightly to 3.3% in March, somewhat lower than Norges Bank’s forecast of 3.4%, noted Nordea Bank. There were reports of price war on several foodstuffs before Easter. Local price indicators also showed a solid fall in prices of the foods covered by media, according to Nordea Bank.
It is uncertain to what extent this has impacted food prices in CPI. Hence, the projection for March core inflation is slightly lower, added Nordea Bank. Meanwhile, some prices are very much expected to have increased because of the timing of Easter, such as air fares.
It is unlikely that the Norges Bank will give much attention to the surprises in running core inflation at the moment, according to Nordea Bank. The central bank has stated that news that are varied from expectations do not influence rate setting as much as it did before. Moreover, the central bank did not give much importance to higher running inflation. High inflation during the beginning of 2016 did not change the central bank’s projection for the remainder of 2016.
