Norway April core inflation rises to 3.3%, in line with Central Bank expectations

Norwegian core inflation for the month of April rose 0.4 pct to 3.3 pct, largely in line with estimates from the Norges Bank, which stated a 3.4 pct core consumer price index in its monthly monetary policy statement in March.

Despite core prices, coming in line with market expectations, sub-indices of the CPI-led inflation varied largely. April food prices surged 3 pct, the highest monthly growth ever after witnessing downtrend of 3.3 pct in March, possibly on supply activities in connection with Easter. In contrast, air fares declined more than 22 pct on month in April, much as expected. Further, group recreation and culture rose more than expected, where the sub-group "other goods" witnessed the strongest growth in April since 1990.

Production in the manufacturing sector grew moderately by 0.9 pct in March, against Reuters estimate of a decline of 0.3 pct m/m, post 0.8% growth in February. This is mainly attributable to the expansion in computer and electrical equipment industry and the construction of ships and oil platforms.

However, domestic inflation eased to 2.9 pct on year in April, from 3.1 pct on year in March and compared to the Central Bank’s projections of 4.4 pct and 3 pct respectively. Overall inflation was 3.2% y/y, compared with Norges Bank's estimate of 3.4%.

"Core inflation is close to Norges Bank's projections and do not indicate any significant other price image than the central bank assumed in March. We do not think Norges Bank will add much weight to the imported inflation now. Whether industrial production is leveling out or not, remains to be seen," DNB said.

The NOK versus the Euro fluctuated just before the figures were released, but did not react significantly right after the numbers were public, DNB added further.