Lower price increase than expected in May and rate of increase in the autumn may be delayed

Interest rateNorges Bank. CEO Øystein Olsen. Photo Norges Bank

The consumer price index was 2.3% higher in May this year than in May last year. Slower price growth raised increased doubts about whether Norges Bank will set up its policy rate in September.


While the consumer price index (CPI) increased by 2.3% in May, the CPI, excluding energy products,was 1.5% in the same period. Adjusted for both tax changes and energy products, CPI-ATE, the increase was 1.2 %, according to Statistics Norway (SSB).

From April to May 2018, the CPI rose 0.1%, while the CPI-ATE increased by 0.2%.

“Inflation is still much lower than Norges Bank expected. We still believe that the management rate will be set up in September, but are in doubt if it is going to happen,’’ said chief analyst Erik Bruce in Nordea Markets.

He indicated that Norges Bank assumed a twelve-month growth in core inflation of 1.6% in May.

Bruce’s analysis is shared by senior economist Kyrre Aamdal in DNB Markets. Lower core inflation than expected and apparently flatter development in price inflation over time, increased the possibility of a rise in interest rates, he believes.


© NTB scanpix / #Norway Today