Marked drop in price of clothes last month

Shopping price of clothesShopping. Photo:

Marked drop in price of clothes last month

A significant drop in the price of clothes contributed to a decline in the consumer price index (CPI) of 0.4 per cent from June to July. The price of clothing fell by 8.6 per cent, according to Statistics Norway (SSB).


Apparel prices fell only by 2.4 per cent in the same period last year.

The twelve-month growth in the CPI fell 0.4 percentage points from June to July, down to 1.5 percent.

At the same time, a price jump on flights from June to July this year, compared to last year, pulls in the opposite direction.

Price growth (CPI) increased 0.3 per cent from June to July, mainly due to an increase in prices of food and non-alcoholic beverages, according to Statistics Norway.

Core inflation, which is an important factor for the interest rate determined by the Central Bank of Norway (Norges Bank), increased by 1.2 per cent from July 2016 to July 2017. The core inflation is the increase in prices with tax changes and energy product excluded, and is dubbed the CPI-ATE.

DNB Markets believes inflation will remain at this level, or even somewhat lower, in the next few months.

Inflation goal of 1.5 per cent

– With prospects of continued moderate wage growth and a somewhat stronger Norwegian crown, it may be difficult for Norges Bank to reach the inflation target in the next few years. The Central Bank will therefore likely keep interest rates low, says analyst Kyrre Amdal in a press release from DNB Markets.

Inflation should be around 1.5 percent in the time to come, according to the forecast from the Central Bank.

“The decline was in line with consensus and marginally above our estimate of 1.1 percent, analyst from Nordea Markets, Joachim Bernhardsen, states in a press release.

“More importantly, inflation is now four tenths higher than Norges Bank’s estimates. That is not insignificant. We still believe that it will have limited impact on the monetary policy. Norges Bank expects inflation to rise again, and it is still far below the target, says Bernhardsen.


© NTB Scanpix / Norway Today