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Fast Comment NorwayCore inflation continues to surprise to the upside

  1. CPI-ATE unchanged at 1.9 pct, above expectations
  2. We had 1.7 pct, consensus 1.8 pct
  3. Norges Bank expecte 1.6 pct
CPI-ATE unchanged at 1.9 pct, above expectations
Core inflation, as measured by the CPI-ATE, continues to surprise to the upside. Recall August, when the CPI-ATE rose sharply to 1.9 percent y-o-y, following 1.4 percent in July. However, Norges Bank deemed this mostly as noise, and expected a sharp reversal to 1.6 percent in September. We and consensus where a bit more careful in our expectations; estimated the CPI-ATE at 1.7 percent and 1.8 percent, respectively. However, the actual outcome showed the CPI-ATE had stayed unchanged at 1.9 percent in September. In isolation, this points to an upward revision to the key policy rate path. Looking at the details: Prices for furniture lifted the annual CPI-ATE rate by 0.2 percentage points, whereas clothing and shoes pulled in the opposite direction by -0.3 p.p. Other groups where broadly neutral/slight positive, and as such the CPI-ATE was unchanged in y-o-y terms. The CPI-ATE troughed in June, at 1.1 percent, and has since risen to 1.9 percent. The data reveal that price inflation for domestically produced goods and services has contributed the most to this increase. With the key contribution stemming from food price inflation; in isolation, this component has lifted the annual CPI-ATE rate by 0.4 p.p since June. But imported price inflation has risen as well, and continues to hover above Norges Bank’s short-term estimates. In summary, the CPI-ATE has shifted upwards in broader terms, something which in isolation points to an upward adjustment to the key policy rate path. We will get two more CPI-ATE prints before the monetary policy meeting in December.


Marius Gonsholt Hov

Senior Economist


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