Norway's inflation increases, but not enough the December rate path

Core inflation came better than expected at 3.1%. Core inflation has been modestly above Norges Bank's forecast lately, but not enough to have any major impact on the December rate hike plan.

Core inflation came in somewhat higher than expected at 3.1%. Core inflation has been marginally above Norges Bank's forecast lately, but not enough to have any impact on the December rate path.

The reason why inflation increased from 3.0% to 3.1% was due to food prices increasing y-o-y. That was in clear contrast to forecast for a drop. Apart from that the picture was very much as expected, but with one interesting downside surprise. Rents actually fell. Admittedly only 0.1%, but that is clear contrast to the trend. Rents are falling sharply in the Stavanger region (oil country) and possibly now enough to influence the number for the whole country. Anyway lower growth in rents will in the longer terms pull inflation down.

Inflation was modestly above Norges Bank's forecast and has remained so in the the last few months. the average difference has been only 0.1% points since the September path and Norges Bank will conclude that inflation has been as expected.

"We expect Norges Bank to remain on hold in December, but that has nothing to do with current inflation", says Nordea Bank.