Norwegian core inflation accelerates slightly year-on-year in March

Norwegian core inflation remains above target and even a bit higher than anticipated. On a year-on-year basis, core inflation accelerated to 2.7 percent in March from February’s 2.6 percent. Consensus expectations were for the core rate to come at 2.5 percent, while Norges Bank’s expectation was 2.6 percent.

The picture was widely as anticipated. Food prices pulled up while prices on clothes and books dropped. The main surprise and the main reason why the core rate came in above expectations was an increase in prices of furniture.

There are some temporary effects on work here, and the main being food prices. Food prices might drop year-on-year in April given the normal Easter price cuts pulling down core. However, that is consistent with Norges Bank’s forecast for 2.3 percent core rate in April.

The picture was broadly as expected. Food prices pulled up while prices on clothes and books pulled down. The main surprise and the main reason why we ended up above our forecast was a rise in prices on furniture etc. which pulled up core by 0.1% point.

“Our first impression is that there is a fair change that we will remain slightly above Norges Bank’s forecast also the coming months”, said Nordea Bank in a research report.