– At least do not show off in the summer – E24

Price inflation is expected to remain elevated when new figures are released on Wednesday. – It’s still too high, says the chief economist.

40-year-old Sindre Brun-Follerås sits in the sun at Youngstorget in Oslo. He’s noticed the price hike in recent years, but he’s not worried too much right now. However, he did take some action.

– The prices of everything have already gone up. Electricity, petrol, food and mortgage. I am trying to become more aware, and this is not a crisis in and of itself. I try to avoid unnecessary purchases that you make just because you feel like it, Brun-Follerås, who works in the health sector, tells E24.

When new inflation figures are released on Wednesday, price levels are expected to remain elevated.

slight decrease

– We believe in a slight decrease in core inflationcore inflationCore inflation A measure of inflation that excludes certain amounts. Usually, you adjust tax changes and delete energy products from the accounts.It will still be very high for E24, says Kjersti Haugland, chief economist at DNB Markets.

From March 2022 to March 2023, core inflation increased by 6.2 percent, and the DNB believes it will fall to 6.1 percent in April. They estimate that the overall price increase will be 6 percent.

Norges Bank is working for core inflation of around 2 percent over time.

Handelsbanken also believes in a slight decline in core inflation.

– We are in a phase where the economy is getting more and more stagnant. Private consumption in particular is limiting sustained activity, says chief economist Marius Gunsholt-Hof.

lower speed

This spring, wage adjustment is likely to be higher than expected, but even if there is real wage growth, it is expected that continued high interest rates will contribute to a weakening of purchasing power.

– Even if we get a marginally higher situation with real wage growth, says Hoff from Handelsbanken, the account will still go into the red if Norges continues to raise interest rates.

– There will be a slowdown in consumption this year, says Hoagland, and the Norwegian economy will slow down.

In March, inflation as measured by the Consumer Price Index (CPI) rose 6.5 percent over the same period a year earlier. From February to March, prices for food and non-alcoholic goods fell 1.7 percent, which Statistics Norway (SSB) linked to the price grip of lower price chains.

Haugland at DNB Markets believes that the overall price increase will decrease sharply during 2023.

– There is every reason to believe so. Even if the devaluation of the krone slows the decline, there is reason to believe that headline inflation will drop significantly. At the same time, wage growth is rising sharply. The good news for people’s purchasing power is that real wages will rise.

But it’s also the case that interest rates will continue to rise, so you won’t have as much fun, says Hoagland.

It does not affect interest rates

On Thursday last week, the Bank of Norway raised the interest rate by 0.25 percentage point to 3.25 percent. It is the highest level since 2008. Just a year ago the interest rate was 0.75 per cent.

Inflation forecasts for DNB Markets and Handelsbanken are close to what Norges Bank itself had projected in its forecast.

– If we are right, it does not mean that the Norges Bank will make any new assessments in terms of interest rate setting, says Haugland.

Several banks raised mortgage interest rates on Monday this week after the Bank of Norway raised its main interest rate.

– You don’t brag

It doesn’t help much with anxiety, Brun-Follerås says, regardless of whether or not it’s related to challenges that can be dealt with.

As for the summer, he says he’s lucky to enjoy it in the immediate area where he lives in Oslo. Since the beginning of the year, the krone has also weakened significantly.

– You don’t show off in the summer anyway, he says.