Norway's inflation likely to drop next year

Norway's core inflation in September came in at 3.1% up from 2.9% last month. Norges Bank expected it to be 3.05. The main reason why inflation increased was that food prices increased y-o-y.

The prices on various goods connected to personal care increased strongly. Contrary to the expectations, price growth on clothes and shoes y-o-y fell only marginally back from August.

There is no doubt that NOK is having a faster/stronger effect on inflation than expected say back in the summer. Imported inflation is now 3.9% up from 3.4% last month and 2.4% in May. It is possibly that the pass over from weaker NOK to imported inflation is stronger than expected. 

"But it is also possible that importers are adjusting prices faster than expected. Inflation is close to peak and it is expected to drop next year", says Nordea Bank.