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Fast Comment NorwayInflation data continues to point to a rate hike in March

  1. CPI-ATE slightly down to 2.1 percent in Dec, following 2.2 percent in Nov
  2. A touch higher than expected: We and consensus had forecast 2.0 percent
  3. Norges Bank expected 1.9 percent, although signalled risks to the upside
CPI-ATE slightly down to 2.1 pct in Dec, following 2.2 pct in Nov
Core inflation, as measured by the CPI-ATE, fell to 2.1 percent in December following 2.2 percent in November. The outcome was slightly higher than anticipated; we and consensus expected 2.0 percent in December. Norges Bank had forecast 1.92 percent. By the second decimal place Norges Bank signaled that risks were skewed to the upside. Relative to Norges Bank, the deviation would have to be 0.2 p.p or more to be deemed as significant. The upshot is that the outcome for December was within the normal range for forecasting errors. Digging a bit into the details, the drop in the annual rate for the CPI-ATE was driven by “the usual suspects,” i.e prices for food and transport. These are highly volatile components, that in December pulled the CPI-ATE down by as much as 0.3 p.p. However, prices for clothing, furniture as well as culture and recreation pulled in the opposite direction; thus mitigating the decline in the CPI-ATE as a whole. In broader terms, price inflation for domestically produced goods and services declined slightly in December, whereas price inflation for imported goods rose somewhat further. In both cases the deviations were fairly small relative to Norges Banks estimates. Summing up: No big surprises this time, and in isolation the data continues to signal a rate hike in March.


Marius Gonsholt Hov

Senior Economist


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