Norway: Inflation drops to a six-month low in March
Inflation came in at 3.9% in March, down from February’s 4.5%. March’s reading marked the weakest inflation rate since September 2023. Looking at the details of the release, the moderation was broad-based, with lower price pressures recorded for housing and utilities, transportation, and food and non-alcoholic beverages.
Accordingly, the trend pointed slightly down, with annual average inflation coming in at 5.0% in March (February: 5.2%). Meanwhile, core inflation fell to 4.5% in March from February’s 4.9%. March’s core inflation print was the lowest in 21 months and came in below Norges Bank’s expectations for a second consecutive month.
Lastly, consumer prices rose 0.23% in March over the previous month, the same as February’s reading.
Our Consensus is for the disinflation process to continue through Q4 2025, although its pace will slow and inflation is seen averaging above Norges Bank’s 2.0% target until 2028. The delayed impact of tight monetary policy and a higher unemployment rate should limit the recovery in domestic demand. This, coupled with a stronger krone and a high base of comparison will limit price growth.
After two consecutive months of core inflation undershooting Norges Bank’s expectations, the odds are mounting that the loosening cycle will begin in September; the Central Bank hinted as much when it last convened on 20 March.