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Fast Comment NorwayCPI-ATE unchanged in June at 2.3 percent, slightly below expectations

  1. CPI-ATE unchanged at 2.3 percent, expected 2.4 percent
  2. Deviation too small to affect the key policy rate path
  3. Rate hike in September still a possibility; signalled at about a 70 percent chance by Norges Bank
CPI-ATE unchanged at 2.3 percent, expected 2.4 percent
The CPI-ATE was unchanged in June, at 2.3 percent, after having dropped by as much as 0.3 percentage points from April to May. The outcome was slightly below expectations, as both we and consensus had forecast the CPI-ATE at 2.4 percent in June. Norges Bank had forecast 2.43 percent; the second decimal place signals that Norges Bank had seen a slight risk to the upside. Having said that, the forecasting error is too small to affect the key policy rate path. A rate hike in September is still a possibility, signalled at about a 70 percent chance by Norges Bank. Looking a bit more into the details, price inflation for domestically produced goods and services was a bit lower than assumed by Norges Bank, whereas price inflation for imported goods was as expected. Speaking of the latter, there are clear signs that the inflationary effect of the past weakening of the NOK is now wearing off (see charts below). In summary, the CPI-ATE has come down from the peak levels seen back in February-April, and is now just a bit above target; the acceleration seen earlier this year proved short-lived, as we expected. Instead, current wage and cost pressures are well in line with the inflation target.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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