Norwegian inflation slows down in April, core inflation likely to pull up in May

Norwegian inflation slowed down in April due to Easter price. Consumer price inflation in the nation slowed to 2.2 percent year-on-year in April from March’s 2.4 percent, and to 0.2 percent sequentially from 0.3 percent. Core inflation remained the same in the month, coming in at 1.7 percent year-on-year, as compared with consensus expectations of 1.9 percent and Norges Bank’s forecast of 2.1 percent.

Surprisingly, the Easter price reduction on food was larger than anticipated. Food prices eased the year-on-year growth by nearly 0.7 percentage points. Apart from the food prices, the rest of the scenario was much as expected. Airfares pulled up 0.5 percentage points, about as expected.

Overall, the Easter effects were negative. Core inflation is expected to accelerate next month. In that case, the gap to Norwegian central bank’s projection would narrow since the Norges Bank’s May forecast is at 1.9 percent. Considerably lower than anticipated inflation is the main downside risk to key rates in Norway, stated Nordea Bank in a research report.