Norwegian January inflation slows down, core inflation below central bank forecast

The Norwegian inflation, gauged by the consumer price index dropped 0.1 percent sequentially in January, as compared with the drop of 0.5 percent in December, according to Statistics Norway. The decline in January was mainly because of broad based sales activity on furniture and clothing.

Prices on clothing dropped 9.6 percent, whereas that on furniture and furnishings dropped 9.7 percent sequentially. Footwear prices dropped 6.3 percent in the same period. The package holiday prices dropped 4 percent.

Lubricants and fuels added most to the slowdown in the inflation drop from December to January. Prices of petrol and auto diesel indicated a gradual rise in the past three months, with the highest change in January.

Petrol prices were up 6 percent, whereas auto diesel prices grew 6.8 percent in the month. Meanwhile, food prices rose 0.6 percent sequentially after repeatedly falling in the last months. Core inflation in January dropped 0.5 percent sequentially in January.

On a year-on-year basis, the Norwegian inflation rose 2.8 percent in January, a slowdown of 0.7 percentage points from December’s 3.5 percent. The rise in the year-on-year inflation was mainly due to increased energy prices. Fuels and lubricants and electricity including grid rent were up 11 percent and 7.8 percent respectively in the period. The fuel prices have indicated negative year-to-year growth since September 2014. However, the trend turned to a rising positive growth from November 2016. However, the slowdown from December was due to the development in prices of electricity including grid rent. The price development on clothing also added to the negative growth change.

The year-on-year core inflation came in at 2.1 percent in January. This is a slowdown from 2.5 percent in December and much below Norges Bank’s forecast of 2.9 percent.