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Fast Comment NorwayPreview: Core inflation in June

  1. The CPI-ATE expected slightly higher again in June; 2.4 pct, following 2.3 pct in May
  2. In line with Norges Bank; hence, neutral to the key policy rate path
  3. Recall the additional volatility in the CPI-ATE during the summer months
The CPI-ATE expected slightly higher again in June
The CPI-ATE figures for June are due next Wednesday. Recall the CPI-ATE fell sharply in May, to 2.3 percent from 2.6 percent in April; the outcome was well below expectations. Through the volatility the CPI-ATE appears to have come down from peak levels. In particular, price inflation for imported goods has declined for three consecutive months, and there are tentative signs that the inflationary effect of the past weakening of the NOK are starting to wear off. Having said that, the CPI-ATE is highly volatile on a monthly basis. And given the particularly weak figure for May (in m-o-m terms), we expect to see a June reading with more solid monthly growth. As such, we foresee a slight increase in the y-o-y rate again, lifting the CPI-ATE to 2.4 percent from 2.3 percent in May. Norges Bank expects the same (neutral to the key policy rate path). Going forward, Norges Bank expects the CPI-ATE to hover around 2.4 percent in the next few months. It is still somewhat above the inflation target, but at least down from peak levels seen back in February-April when the CPI-ATE hovered around 2.6-2.7 percent. As a final comment, recall that there is some additional volatility in the CPI-ATE during the summer months, driven by the volatile airfares component. As such, we prefer to smooth through the June and July data before judging whether the data has deviated from Norges Bank’s short-term forecasts.


Marius Gonsholt Hov

Senior Economist


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