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Norway Inflation January 2024

Norway: Inflation drops to three-month low in January

Inflation ticked down to 4.7% in January, easing slightly from December’s 4.8%. January’s reading marked the lowest inflation rate since October 2023. Looking at the details of the release, the moderation was driven by cooling price pressures for transportation, and food and non-alcoholic beverages.

Consequently, the trend pointed down, with annual average inflation edging down to 5.3% in January (December: 5.5%). Meanwhile, core inflation slowed to 5.3% in January, down from the previous month’s 5.5%; the reduction was smaller than markets had anticipated.

Lastly, consumer prices rose 0.08% in January over the previous month, mirroring December’s reading. January’s result marked the weakest reading since September 2023.

Looking forward, average inflation is expected to ease gradually from current levels through Q4 2024. The delayed impact of restrictive monetary policy, a high base of comparison and a stronger krone will drive the disinflation process. Consequently, inflation will average below 2023 this year, although our Consensus is for it to miss Norges Bank’s 2.0% target; it is not seen returning to target until 2027.

Meanwhile, the smaller-than-anticipated reduction in core inflation in January dampened expectations that Norges Bank could kick off its loosening cycle sooner than expected. Only half of our panelists expect the first rate cut in Q2, while others have penciled it in for Q3 and as late as Q4.

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