Price growth was much lower than expected, but chief economist Kjersti Hoogland believes food prices could rise and lead to higher interest rates with them.
– A much bigger drop than expected, says DNB Markets chief economist Kjersti Hoogland to E24.
In September, the overall price increase was 3.3 percent. Down from 4.8 percent in August. Among the contributors are food and electricity prices.
– Food prices fell significantly, among other things, fish and meat. The fish had an unusual fall. We might get a little one recoilrecoilHe increases Back there in October, she says, meaning the deviation from Norges Bank won’t be as big as it seems now.
Food prices fell by 1.5 percent in September, and fish was down 9.1 percent from the previous month. Meat prices fell by 3.1 percent.
Despite a drop in prices last month, food prices remained 7.7 percent higher in September this year than a year ago.
Read on E24+
Hut on the Mountain: Here you can make a deal now
Low electricity prices
Electricity prices, which do not affect core inflation, but the overall price increase was much lower than in September last year. The month on which the price increase is based.
– She says that electricity prices fell sharply, and we should be able to expect something to rise again due to abnormally low prices in September.
From August to September, electricity prices, including grid rent, fell by 16.1 percent. Last year, prices rose by 10.5 percent during the same period.
– There is a clear trend in interest rates rising to their peaks
Marius Gunsholt Hof, chief economist at Handelsbanken, does not believe that today’s numbers were a bluff, and explains that imported goods and goods and services produced in Norway came in at a lower level than Norges Bank had expected.
– He says if you look at the details, there was a widespread decline in price growth.
It is rate increases that do not include tax and energy price changes that Norges Bank is most concerned with when it sets its key interest rate. Called core inflation, it fell to 5.7 percent from 6.3 percent in August.
– Core inflation has already peaked, and we clearly see that the decline in core price increases is larger than Norges Bank envisaged, says Hof.
The Norwegian Central Bank will meet to discuss interest rates in November and December. At the first meeting, the interest rate was expected to remain calm, but at the meeting in December, Central Bank Governor Ida Wolden-Basch said that there would likely be a rise.
Now its chief economist believes Norges Bank will abandon its plans to raise new interest rates.
The numbers clearly indicate that the peak has been reached, says Hof.
– Not really sure
Hoagland says the decline in price growth was much greater than she had previously expected. Low core inflation in particular is important for interest rate expectations.
– The Bank of Norway announced that it is likely to raise interest rates in December, but depending on the data received. They now have a data point that speaks strongly against another increase in interest rates.
– Could the interest rate cut come sooner?
– Norges Bank expects interest rates to rise in December and remain unchanged until March 2025. It says that if more numbers confirm lower inflation than Norges Bank feared, it will pave the way for an early rate cut.
DNB Markets continued its forecast that there will be another rate hike in December, but is keeping the door open for that to change.
-If we get another number that supports the impression that the underlying price increase is now decreasing, we will be able to change the forecast. “I’m not really sure yet,” says the chief economist.
“Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff.”