Norway: Inflation on the upside – Nordea Markets

Erik Johannes Bruce, Research Analyst at Nordea Markets, notes that the Norway’s inflation ended up at the upside to Norges Bank’s forecast and all is set for a September hike.

Key Quotes

“Core inflation in July came in at 1.4% y/y up from 1.1% last month. Nordea was 1.1% while Norges Bank and consensus was 1.2%.”

“The main reason for the rise in inflation is food prices which rose sharply and much more than normal in July. That was main surprise to us.”

“A September hike is of course even more likely after today’s figure being 0.2% point above Norges Bank. It also strengthens our belief in inflation hovering around 1.5% in the second part of 2018. But we see no reason to raise our forecast significantly.”

“Norges Bank has 1,5% as August forecast. We find it likely that we end up close to that. Possibly somewhat on the upside but not by 0.2% as this month.”