Norwegian core inflation accelerates slightly in September

Norwegian inflation came in a bit above the central bank’s forecast; however, it is not sufficient to change Norges Bank’s view, noted Nordea Bank. Core inflation came in at 2.2 percent year-on-year, slight acceleration from August’s 2.1 percent. Consensus and Norges Bank’s expectations were 2.1 percent.

As anticipated, a more solid comeback in 2019 than last year in prices on clothes and shoes after the summer sale was the main reason why core inflation rose year-on-year in September. However, there were some surprises. Especially hotel and restaurants surprised on the downside and year-on-year growth in these prices is now just 1.5 percent, which might be last given that the current wage growth at well above 3 percent. Meanwhile, prices on furniture and airfares surprised on the upside.

“This figure is in line with our view on inflation, which we belive will on average be at or slightly above the target the coming months and close to Norges Bank’s forecast. Inflation will not be the main issue for monetary policy looking ahead”, said Nordea Bank.

Growth is likely to decelerate soon to be in line with Norges Bank view and unemployment is expected to move sideways. The risk to this picture is seen on the upside, stated Nordea Bank.