Consumer Price and Wage Index | Good news from Nordea – you think peak prices will arrive soon

Consumer Price and Wage Index |  Good news from Nordea - you think peak prices will arrive soon

Norway’s inflation rate is now 6.3%It is the highest level since 1988. In fact, the real price hike – inflation – of 8.2 per cent would not be for electricity subsidies.

Families are now bearing the brunt of high food prices and persistently high fuel and electricity prices. In addition, interest rates are rising.

Inflation in June is much higher than what the parties expected in real life (see below). But Cekov also has good news for families: Nordea believes total revenue growth from 2021 to 2022 will be well above this year’s wage limit of 3.7 percent.

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up to 4.5 percent

Yes, we believe in aggregate wage growth of 4 to 4.5 percent, and it could be higher. One thing is the central framework for frontline themes, but we also have local supplements in the workplace, and many jobs are changing. There is a good demand for labour.

I think now that 4.5 per cent is a reasonable estimate. At best, Norwegian households can have a sideways twist in purchasing power, but there is the potential for a dip, he says.

Will the decrease in purchasing power this year have any effect on wage settlement next year?

– Settling wages a little bit “done”. Chekhov answers, and we’re still assuming 4 per cent wage growth next year and a 3 per cent price increase. In other words, a real wage drop of 1 percent this year may soon be offset next year.

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fall in autumn

The other good news for households is that Nordea and Chekhov believe high inflation will slow throughout the year. In July, it could rise to 6.5 percent, but now rough forecasts are around 5 percent as average growth from 2021 to 2022.

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– Electricity and energy prices started to rise especially after the summer of last year, and we believe that the overall price growth will start to slow down from August. But despite the electricity subsidy, prices will remain at a high level, says Chekhov.

Parties in working life place great emphasis on the estimates made by the Technical Accounts Committee (TBU). The sample in March expected the average price to rise from last year to the current year by 3.3 percent. This gave a limit of the so-called front threads of 3.7 percent.


The June figures for inflation surprised experts. Nordea Markets forecast annual growth in June of 6 percent, slightly higher than its competitors in DNB markets (5.7 percent). Food prices rose in June, which is unusual.

– We were a little surprised by the significant increase in fuel prices. We thought there was a 6 percent increase here, but the result was roughly 13 percent. Electricity prices fluctuate a lot, and the result has been a marginal increase from June to July.

– And then food prices surprised with an extraordinary increase in June, and will certainly continue to rise next month, macro analyst Dane Cekov at Nordea Markets tells Nettavisen.

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A significant increase

Nettavisen cart shows all 16-17% increase for about 30 selected foodsbut it can subside over the course of a month.

How much do you think food prices will rise?

– We expect a fairly moderate increase of 5 percent, but it may surprise you to become even higher, answers Chekhov.

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He points out that the prices of foodstuffs, transportation services, and hotel and restaurant prices are what led to the rise in inflation in June in particular. Nordea believes these prices may rise further during the summer.

Cekov and his colleagues also believe in higher airfares next month due to extremely high travel activity in July, chaos in Europe and a strike at SAS. There is also good demand for hotels and restaurants, which make up a total of 6 percent of the Norwegian CPI.

import price hike

Norwegian prices rose in June lower than the prices of goods and services we buy from abroad, and import prices. It’s somewhat surprising, Chekhov says, that import prices have slowed growth, especially since it was goods produced in Norway that rose.

– But we believe that imported prices can go up even more. This is due to the weak Norwegian krone and higher prices abroad. Imported inflation increases core inflation, as does wage growth here at home.

– There is pressure on wages and a tight labor market, which is one of the main reasons that prompted the Bank of Norway to raise its interest rate forecast in June. Price hikes don’t mean everything, Chekhov says, but it’s one of the most important factors in interest rates.

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Norges Bank manages interest rate and monetary policy according to the core inflation in society: core inflation. Here one ignores the volatility of energy prices and tax changes. The higher this inflation, the higher the risk in isolation from the increase in interest rates.

The long-term price target is 2 percent. The same central bank forecast core inflation in June would reach more than 3 percent, but it could rise to more than 4 percent in August. This may put more pressure on interest rates.

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We believe that Norges Bank is committed to the plan and raises the key interest rate in August to 1.5 per cent. They were very clear about that during the June rate meeting. Before the regular interest rate meeting on September 23, new calculations will be made, and we can rule out that this will put more pressure on interest rates, says Chekhov.

However, Nordea Markets believes it is too early to conclude whether Norges Bank will add another 0.50 percentage point increase in September. But the first 0.25 percentage point increase actually comes in August.

5% mortgage rate

Nordea Markets believes the key policy rate by the end of 2023 will be 3.25 per cent. In this case, the typical mortgage rate would be about 5 percent, up two percentage points from today. Europe’s uncertainty and energy crisis speak in favor of low interest rates, and unexpectedly high inflation here at home for higher interest rates.

The base price increase from June 2021 to June 2022 is close to 3.6 percent from the highest measured (3.7 percent) since these measurements began in 1995. This record may be broken in July and August.

The Bank of Norway’s interest rate committee is putting an end to its peg scheduled for Friday before interest rate meetings, i.e. September 17th. Then the central bank received, among other things, inflation figures for August (published on September 10).

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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