Norwegian core inflation accelerates in November on higher food prices

Norwegian core inflation came in above Norges Bank’s forecast in November, owing to increased food prices. Core inflation accelerated to 2.2 percent year-on-year from October’s 1.6 percent, as compared with Norges Bank’s expectation of 1.8 percent.

As was anticipated, airfares added 0.3 percentage point to the headline figure, slightly above expectations. Food prices, which was the main surprise, rose 1.3 percent sequentially. However, food prices dropped 0.4 percent on a year-on-year basis. Food prices added 0.24 percentage points to the headline figure. Apart from this the picture was much as anticipated with moderate changes in year-on-year growth. Food prices are volatile with year-on-year growth now 3 percent compared to 1.2 percent last month. Most food consumer groups surprised on the upside.

“We would not make too much out of one month with inflation on the upside especially when driven by the volatile food prices. We guess Norges Bank to a large degree will draw the same conclusion. Still todays ‘figure support our view. Norges Bank will present a rate path very similar to the one in September despite the financial unrest”, stated Nordea Bank.