Norway: Inflation did not fall back in September – Nordea Markets

Erik Johannes Bruce, Research Analyst at Nordea Markets, notes that Norway’s core inflation in September came in at 1.9% y/y as in August against the Nordea and consensus of 1.8% while Norges Bank’s forecast was 1.6%.

Key Quotes

“The main reason why inflation ended up slightly above our forecast was that prices on furnishing etc. climbed much more than expected. It pulled up core by 0.2% points. Add to this that most consumer groups pulled up this time. The exception being clothes which pulled down and more than we had expected. Transport was also slightly lower.”

“The reason why Norges Bank gave little weight to the current low inflation at the September meeting was that it saw the surprisingly high August figure as a fluke. It was not a change in its reaction function, meaning that it ignored current inflation.”

“Today’s figure argues against the August figure being a fluke and for an upward revision to the rate path in December.”