Norway recorded core inflation of 3.3% y/y in April, unchanged from March’s print. Consensus expectations were for inflation to be at 3.3%, whereas central bank had forecast 3.4%. Last month food prices rose solidly following a drop in March. It helped in accelerating core inflation by around 0.3 percentage points.
Meanwhile, airfares declined in April that led to decline in core inflation by 0.2 percentage points. Moreover, core inflation was also pulled down by 0.1 percentage points by recreation and culture. Also, early Easter might have influenced the inflation print by a certain degree, said Nordea Bank.
Imported goods’ price growth has slightly decelerated since the beginning of 2016 that might indicate that the impact of NOK’s past weakness has peaked, according to Nordea Bank. This is consistent with the view that Norway’s inflation might decelerate soon, added Nordea Bank. Meanwhile, rents rose 0.2% m/m in April as compared with March’s 0.3% growth. Lower rise in rents also points towards the likelihood of lower inflation.
Overall, Norway’s inflation is likely to decelerate in future. The nation’s central bank is unlikely to focus on slightly lower core inflation in April as it is just 0.1 percentage point below the forecast. Also, the Norges Bank had mentioned earlier that inflation data different from projections will not influence rate setting much as compared to before.
