Norway’s core inflation unchanged in June

Norway’s core inflation came in more than Norges Bank’s forecast in June. Transitory factor has contributed to higher inflation. Norway’s core inflation came in at 1.6 percent year-on-year in June, unchanged from May. Consensus expectations were for core inflation to come in at 1.4 percent, while Norges Bank’s forecast was 1.3 percent.

Stronger rise in airfares was the main upside surprise in June. Transport, mainly airfares, pulled up core inflation by 0.4 percentage points while expectations were for a rise of 0.3 percentage points. Norway’s inflation was still unchanged despite the sharp rise in air fares was mainly rather strong and more normal price cut on sales items such as clothes and furniture’s compared to last year.

Core inflation 0.3 percentage points above Norges Bank forecast is sufficient to influence the rate path. Still, it is advisable to not draw strong conclusion on the inflation figures. The sharp rise in airfares has to do with the sampling period covering the start of school holiday this year and not last year and year-on-year growth would possibly drop next month, noted Nordea Bank in a research report.

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