Norwegian core inflation accelerates above expectations in August

Norway’s core inflation accelerated above expectations in August. On a year-on-year basis, core rate came in at 1.9 percent, as compared with consensus expectations of 1.8 percent and Norges Bank’s projection of 1.6 percent.

Prices on furnishing rose above expectations in the month, driving the headline rate above projections. It contributed 0.2 percentage points to the core rate. Furthermore most consumer groups pulled up this time. Clothes were the only exceptions that pulled down more than anticipated. Transport also came in slightly lower.

Prices on furnishing rose 3.2 percent. Nevertheless, prices were quite subdued in the second part of last year. These prices are expected to stay high in the months ahead compared to last year, stated Nordea Bank in a research report.

Norges Bank give little weight to the current low inflation during September meeting because it saw the surprisingly high August figure as a fluke.

“Today’s figure argues against the August figure being a fluke and for an upward revision to the rate path in December. In the same direction argues oil prices on the upside with NOK at the same time marginally on the weak side. Higher expected rates abroad also argue for an upward revision. But we need strong labour market figures the coming months”, added Nordea Bank.