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Fast Comment NorwayPreview: Core inflation and manufacturing output

  1. CPI-ATE expected at 2.0 percent in December, down from 2.2 percent in November
  2. Neutral to Norges Bank (expecting 1.9 percent)
  3. Manufacturing output expected down by 0.5 percent, following a solid 1.5 percent increase in October
CPI-ATE expected to fall back in December; neutral to Norges Bank
Core inflation, as measured by the CPI-ATE, rose sharply from 1.6 percent in October to 2.2 percent in November. According to the details, the raise was explained by higher price growth for domestically produced goods and services (price inflation for imported goods was unchanged). For December, however, we expect to see a fallback in the CPI-ATE, to 2.0 percent y-o-y. The key reason for this is that the monthly change in November was at the higher end, about one standard deviation stronger than usually observed for this month. We thus expect to see a somewhat softer reading for December again, which should lower the annual rate. Norges Bank has also taken this into account, and thus our short-term inflation forecast is neutral to the key policy rate outlook (Norges Bank is expecting 1.9 percent). As a final reminder: The deviation vis-à-vis Norges Bank would have to exceed 0.2 p.p. (in absolute terms) to be deemed significant. The figures are due next Thursday. Furthermore, we will on Monday morning see figures for manufacturing output in November. Here we expect to see a slight decline (-0.5 percent m-o-m), but recall output rose by a solid 1.5 percent in October. The trend is pointing upwards, in particular supported by increasing activity among the supplying industries.


Marius Gonsholt Hov

Senior Economist


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