**As seen in Risk In The Week report 01/05/24, subscribe at cablefxm.co.uk/reports
Norway consumer prices rose by 4.8% Y/y in November, this came below expectations of 4.9% but faster than the prior 4.0%. Underlying consumer prices rose by 5.8% and missed the estimate of 5.9%, the November data confirms a resumption of the downward inflation trend. The divergence between headline and underlying inflation could be attributed to an uptick in food prices, the component rose by 9.1%, the fastest since June. On the month, clothing and housing prices rose the most, the latter has seen two consecutive months of increases.
Analysts at SEB said that inflation has trended lower since the middle of 2023 while upside surprises relative to the Norges Bank forecasts have not materialized. SEB added that food prices normally decline in December, however, they expect a smaller decline than normal this year. Lastly, SEB warned that high wages, a softer krone and higher rents are expected to make the decline in Norwegian inflation more gradual than in many other countries. The desk at UBS expects further decline in underlying inflation over the coming months and their view is that the Norges Bank policy rate has peaked. UBS expects the Norwegian central bank to start cutting rates in September, they pencil a 25bps rate cut every quarter until a 2.5% policy rate is reached.
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