on Monday morning, new figures from Statistics norway which showed that core inflation, inflation which the central Bank sets the interest rate after, was 2.9 per cent in the september year-to-year.
Core inflation is inflation adjusted for tax changes and energy prices.
It is used by, among others, Norges Bank as a better measure of underlying price trends in the community.
In august this was at 3.3 per cent, and thus well above the Norges Bank’s target of a kjerneinflasjon of 2.5 per cent over time.
It is the rise in prices for imported goods, which has given this high rate of inflation.
This chart is created by a marked weakening in the exchange rate from 2013 to the beginning of 2016, mainly as a result of the fall in oil prices and weaker various companies ‘ growth prospects for the Norwegian economy.
Through the end of 2016 has the crown, however, strengthened again.
the Question has therefore been kronesvekkelsens effect on price inflation eventually takes, and how far down the Norwegian rate of inflation will fall.
THINK about THE FURTHER INFLASJONSFALL: Makrostrateg Joachim Bernhardsen in Nordea Markets.
– Have persisted surprisingly long time
Analyst Joachim Bernhardsen, Nordea Markets believe we are beginning to see the start of a cover now.
– initially I had thought that the effect would take over for a little while ago. To have the persistent increase in prices, one must have persistent kronesvekkelse. When the crown does not depreciates further, you will not get another price increase – it will flatten out, ” he says, and continues:
– the Increase in imported prices has persisted longer than one would expect from a traditional pattern, and it can have a connection with that kronesvekkelsen have been so powerful.
- Inflation is the same as the rise in prices
- Kjerneinflasjon is a measure of inflation where one does not take with the price of energy (electricity) and the effect of nominal rate changes.
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If Norges Bank believes that inflation will rise above target, they do like to up the interest rate. This leads to a stronger krone exchange rate and also lower demand from Norwegian households and businesses. Both parts result in lower inflation.
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If the central bank believes inflation is likely to fall below the goal, to be cut, like interest rates.
the twelve-month growth in import prices fell from 4.4 per cent in august to 3.5 per cent in september, show figures from STATISTICS norway.
– Imported prices make up about one-third of the rate of inflation in Norway. When it drops significantly back, it has great effect on the rate of inflation, ” says Bernhardsen.
He adds that the wage growth in the addition will be moderate as a result of oljenedturen.
– We expect thus a kjerneinflasjon of 2 per cent in 2017, then 1.5 per cent in 2018, he said.
It may still be that the forecasts must be changed if inflation falls more strongly than expected ahead now.
We see a little delay now, that it takes some time before kronestyrkingen reflected in inflation. Had you asked me a year ago I have believed that inflation would have been lower today. It has surprised us and other forecasters, among others, the Norges Bank, that the imported inflation has persisted so long even though the crown has flattened out.
Norges Bank let the interest rate be
For the high estimate
While Nordea Markets in advance expected a fall to 3.2 per cent, waited, DNB Markets and Handelsbanken that the twelve-month growth in core inflation would end at 3.3 percent. Norges Bank’s estimate was of 3,25 per cent.
“Kronesvekkelsen the last few years have helped to pull inflation up through higher prices of both imported consumer goods and imported intermediate goods. It may appear that there has been no breakthrough from the kronesvekkelsen to consumer prices has been stronger than we previously assumed”, writes the central bank in the last monetary policy report, published in september.
(the case continues under the picture.)
EXCITED about the DEVELOPMENT IN 2018: senior economist Marius Gonsholt Hov, Handelsbanken Capital Markets.
Norges Bank estimates in the report that the twelve-month growth in core inflation will hold in excess of 3 percent through the fall.
It is pointed out that the unexpectedly high inflation in the last few months, to some extent, caused by temporary conditions that will be reversed, and that the future path of inflation can be mitigated as the effect of kronesvekkelsen be phased out.
Think on the marked decrease in the next year
There has been uncertainty around the inflasjonsprognosene this autumn, says senior economist Marius Gonsholt Hov, Handelsbanken Capital Markets. You have known that they were going down, but not when or how much.
Eksperter: The crown will strengthen itself – the vacations are cheaper
– It is not surprising that we get the kind of cover now, he says, but points out at the same time that core inflation came in a good deal lower than expected.
Gonsholt Hov refers to the decline in the price of imported goods.
– We see that inflation follows the development in the krone exchange rate. It is common with around three to six months of delay. It takes some time before the change in kronesvekkelsen seated and the prices are adjusted. We have put behind us a period of sustained kronesvekkelse where we have seen that the prices the whole time has been screwed up, but we’ve known that it was contingent developments in the krone exchange rate and a temporary effect, ” he says.
Gonsholt Hov don’t think we will see major changes for the rest of the year, but that it can be exciting to see what happens next half of the year:
– We go into the new year with a stronger dollar, and we think we can see a quite marked decline in the rate of inflation and that we end up well below the inflation target next year. Look, we even further forward, we can see an inflation down in one century.
In addition to that the effect of kronesvekkelsen be reversed, there are also multiple underlying factors which suggest that the inflation rate is going down, says Gonsholt Hov, and shows that the developments in the Norwegian economy is modest, capacity utilisation in the Norwegian companies under the normal level and wage growth low.
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