Norway Inflation August 2016


Norway: Inflation eases in August

September 9, 2016

In August, consumer prices dropped 0.5% over the previous month, which contrasted July’s reading (+0.6% month-on-month) and undershot market expectations of a 0.4% drop. This was the lowest monthly change seen in five years. According to Statistics Norway, lower prices for food and transportation were the main drivers behind the decrease.

Inflation decelerated to 4.0% growth in August, after having hit a multi-year high of 4.4% in July. Although this is still largely above the Central Bank’s target of a 2.5% annual change in consumer prices, the decline has lowered the chances of a policy rate cut at the Bank’s meeting later this month. Annual average inflation in August inched up to 3.2% from July’s 3.0% and marked the highest level seen since July 2009.

Meanwhile, the core consumer price index, which excludes taxes, fees and energy prices, decreased 0.5% month-on-month in August, which contrasted July’s 0.7% rise. Core inflation decreased from 3.7% in July to 3.4% in August.

The Norwegian Central Bank expects inflation to average 3.3% in 2016 and 2.2% in 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 3.1% in 2016, which is up 0.2 percentage points from last month’s estimate. In 2017, the panel expects inflation to average 2.4%.

Author: Marlène Rump, Senior Data Analyst

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Norway Inflation Chart

Norway Inflation August 2016 2

Note: Year-on-year and month-on-month variation of consumer price index in %.

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