Norway: Inflation steadies in June
Latest reading: Inflation came in at 3.0% in June, matching May’s result. Looking at the details of the release, a more moderate rise in prices for housing and utilities plus food was offset by a faster rise in prices for transport.
The trend was unchanged, with annual average inflation coming in at May’s 2.7% in June. Meanwhile, core inflation—Norges Bank’s preferred gauge of price pressures—rose for the first time in four months, increasing to 3.1% in June from the previous month’s 2.8%; the print was in line with both market and Norges Bank expectations.
Finally, consumer prices rose 0.22% in June over the previous month, below May’s 0.36% increase. June’s result marked the weakest reading since March.
Outlook: Our Consensus is for inflation to stabilize in Q3 before easing in Q4. Overall this year, inflation is set to wane to a five-year low. Past interest rate hikes, softer commodity prices and a high statistical base effect will drive the moderation. Meanwhile, a continued recovery in purchasing power will spur private consumption growth, keeping overall inflation above Norges Bank’s 2.0% target for the fifth year running. Key factors to watch include the strength of the krone and the pace and timing of monetary policy easing.