Norwegian headline inflation slows down in November

Norway’s inflation came in much lower than projected in November, noted Nordea Bank in a research report. The consumer price inflation on a year-on-year basis came in at 3.5 percent and on a sequential basis it came at 0.2 percent. Meanwhile, Norway recorded core inflation of 2.6 percent year-on-year, as compared with 2.9 percent in October. Consensus expectation was for 2.9 percent, whereas Norges Bank expected 3.2 percent.

Food was the main surprise. Food inflation dropped to 1.6 percent year-on-year from 3.2 percent in October, pulling down core by 0.2 percentage points. Declining prices on furnishing etc signifies the remaining 0.1 percentage points.  In recent times, food prices have been quite volatile and it is uncertain whether to judge this as lasting, said Nordea Bank.

Inflation now is considerably lower than the Norges Bank forecast. In October it was 0.3 percentage point below the projection and now it is 0.6 percentage points below the forecast. However, it is uncertain how much Norges Bank would do out of it.

The central bank projected that inflation will decelerate further ahead and that it happens earlier is likely not that important. Furthermore, some of the downward movement seen this month might be temporary. The rate path next week would continue to provide a rate cut less than 50 percent chance and might probably stick to that. However, that uncertainty has risen, added Nordea Bank.