February 4, 2023

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Price growth in Norway eased to 6.5% in November - E24

Price growth in Norway eased to 6.5% in November – E24

Inflation in this country remains at a high level. However, it is much lower than last month. Economists think this is good news for raising interest rates.

Christmas shopping is well underway at Karl Johan in Oslo.
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Norway’s inflation rate, as measured by the Consumer Price Index (CPI), was 6.5 percent in November compared to the same month last year. This is what the latest figures from Statistics Norway show.

From October to November 2022, the consumer price index decreased by 0.2 percent, and in November it was 6.5 percent higher than it was a year ago. The price increase is thus one percentage point lower than in October. The development in electricity prices is contributing the most this fall, SSB wrote in a press release.

One of the most important reasons for the rise in prices in November is the rise in food, electricity and fuel prices in November of this year compared to last year. This is what the picture has been like for the past six months, said Espen Christiansen, a department head at Statistics Norway, in the press release.

The goal is for the inflation rate to remain at 2%.

Read on E24+

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Special November numbers

Swydback’s chief economist, Kjetil Martinsen, notes that inflation numbers remain high, although they came in lower than expected.

– We should not think that we are now free at home, although inflation has fallen by three tenths of our and market estimates, he says.

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Special November numbers. They’re largely driven by Black Week and pre-Christmas sales, Martinsen says, and maybe it’s very special this year because many stores dread pre-Christmas sales.

The furniture and electronics industry in particular featured a lot of sales activity throughout the month.

– It may have contributed to lower inflation somewhat, he says.

In its latest forecast for next year, Statistics Norway revised its estimate of inflation to 4.9 percent, up from 3.5 percent earlier in the September report.

Martinsen believes that next year there will be drivers that push inflation higher, drivers that will have a dampening effect.

The fact that the shipping crisis of the Corona pandemic with bottlenecks and high costs is about to be behind us will have a dampening effect on price pressure.

– We are now at a stage where prices related to the pandemic have fallen again due to bottlenecks and high shipping costs, and this is likely to have an impact on commodity prices in the future. He says we see these trends in the US and expect them to come to Europe.

On the one hand, pressure on the rental market will push up prices.

Looking ahead to the next year, there are some drivers that will keep inflation high. He says rents, a large and slow component of core inflation, will only rise next year.

Cautious decline in food prices

Economists and analysts had in advance expected price growth to moderate to 7.0 percent year-on-year, according to Bloomberg estimates. In October, the inflation rate was 7.5 percent.

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The core inflation rate, which means price increases excluding electricity and tax changes, was 5.7 percent. Upfront, it was expected to fall at 6.0%.

In October, the core inflation rate was 5.9 percent.

Food and non-alcoholic beverage prices also contributed significantly this month to the 12-month average increase in the CPI unchanged. Since November last year, prices for this group have increased by 12.7 percent.

From October to November, food prices fell 0.4 percent.

Elisabeth Holweck, chief economist at Sparebank1 Group, notes that the level of inflation has now stabilized and may be on its way down.

– The inflation figures for November and the regional network reinforce the belief that the central bank will settle for an increase of 0.25 percentage point, she told E24.

More interest rate jumps

Today’s inflation figures come just under a week before the Bank of Norway holds its interest rate meeting again.

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Limiting the sharp rise in rates has been the main stated goal of the several hikes in interest rates over the past year. The key interest rate was raised by 0.5 percentage point three times in a row earlier this year, before the central bank slowed down in early November to a 0.25 percentage point hike.

The interest rate is now at 2.50 percent, the highest rate since 2009. Next week, another increase is expected.