Prices are rising more than expected – E24

The case is being updated

Core inflation rose to 3.7 percent in August compared to the same month last year, according to Statistics Norway (SSB).

In advance, core inflation was expected to remain unchanged at 3.5 percent annually from the previous month, according to Infront TDN.

Core inflation is often called core inflation and excludes electricity and fuel prices. This is what Norges Bank looks at when setting interest rates. Norges Bank’s inflation target is two percent over time.

“The increase is mainly due to food prices, which showed a twelve-month growth of 4.2 percent in August. Furthermore, furnishings and furnishings and decorative items in particular contributed an increase of 10, 6 percent from August of last year, ”the agency writes.

Inflation rose after the weakening of the crown

In total, inflation rises to 1.7 percent from 1.3 percent the previous month.

The rise in headline inflation was tempered by electricity prices. Electricity, including grid rent, showed a 33.4 percent price drop from August last year to August this year.

Norwegian inflation has skyrocketed after the crown weakened to new records at the beginning of the crown crisis, but is expected to decline as that effect wears off.

– Core inflation accelerates even more, but only as a result of increased imported inflation; Compare the weakening of the crown at the beginning of the crown crisis. The rally has come faster than expected, something Norges Bank will see a lot through, writes Handelsbanken in a comment.

Higher than expected by Norges Bank

Norges Bank expected 3.2% core inflation in advance. To bring inflation down to the two percent target, the central bank can raise interest rates.

But the target is flexible and allows for higher inflation in periods to contribute to high and stable production and employment. Norges Bank also expects inflation to gradually decrease.

Danske Bank’s Kristoffer Lomholt also notes that inflation is again significantly higher than Norges Bank expected, which would normally have had a significant impact on the interest rate forecast.

– This time, the effect will likely be less, he writes in a comment, but adds that he still believes in a somewhat higher interest rate trajectory from Norges Bank at the September 24 meeting.

There is a widespread expectation that interest rates will remain unchanged at a record low of zero percent at this meeting, but the recent recovery in the economy and a strong housing market may mean that the first interest rate hike will accelerate. . The interest rate path (forecast) for June does not show interest rate increases before the end of 2022.

Here you will find the figures in Statistics Norway