Norwegian core inflation seems to have slowed further in September

Norway’s core inflation in July had accelerated to a new high of 3.7 percent, which was a huge upside surprise. However, it decelerated in August to 3.3 percent and is expected to further slow to 3.2 percent in September, according to Nordea Bank. Statistics Norway is set to release the September inflation data next week. Norges Bank projection from September monetary policy report was 3.26 percent.

The projection for a moderate alteration in core inflation is based on solid alterations in several consumer groups, stated Nordea Bank. Most of the consumer groups are likely to show lower or unchanged price growth. Prices of food are anticipated to have decelerated further from the solid rise in the summer.

Furniture and clothes prices are expected to have rebounded less than 2015 after rather moderate price reductions in the seasonal sale. However, a severe rebound in airfares following a weak data in August prevents core inflation from declining further. Air fares likely rose 0.2 to 0.3 percentage points, stated Nordea Bank.

Inflation might be slightly below Norges Bank’s projection, but not enough to have any effect on the monetary policy outlook. There has been a lot of volatility in prices on several consumer groups, such as air fares and food.