Higher prices for imported goods and services combined with lower speed in the Norwegian economy could make 2015 the worst year on long Norwegian wage earners.
The downturn continues for the Norwegian krone and the oil price.
Yesterday afternoon cost one dollar 7.66 million. Not since August 2003, the krone has been weaker against the US currency.
– Two things are behind this decline. Firstly crown particularly weak because of the sharp drop in oil prices. Secondly, the dollar especially strong because it goes well in the US economy. The first interest rate increase in the United States may already this summer, says Erik Bruce, chief analyst at Nordea Markets.
Measured against Norwegian kroner dollar now 24 percent stronger than it was a year ago and 36 percent stronger than in January 2013.
Lowest wage in 25 years
Oil prices are now more than halved since summer 2014. Yesterday continued downturn and a barrel of Brent oil traded Monday afternoon for $ 54.95.
Higher prices for imported goods and services combined with lower speed in the Norwegian economy could make 2015 the worst year in the Norwegian economy for a long time.
DNB Markets estimates that the growth in wages, adjusted for inflation, will end at 0.5 percent this year.
It is the lowest real wages of over a quarter century, writes brokerage in its morning report Monday.
Harald Magnus Andreassen, chief economist brokerage Swedbank believes growth in real wages could end right down to zero in 2015. This means that the entire wage eaten up by higher prices.
– For many Norwegians, it may feel abnormally with low real wage growth. The last 15 years it has remained at 2.7 per cent per. years. But there is probably no one feels sorry for us. We’ve had good luck for many years. Now the situation becomes more normal as well, says Andreassen.
Tesla and Apple raises price
As late as June 2014 was the dollar under 6 million.
– I think it is very long until we get to see number 5 again. We believe the Norwegian krone will continue to remain weak against the dollar for a good while to come, says Bruce.
The Norwegian currency has also depreciated significantly against the euro and pound since last summer. Bruce says Norwegians must assume that imported goods become more expensive.
– Inflation has already increased and reached 2.5 percent in the year. It may well be the further increase if the krone continues to be as weak as now. It will give more expensive clothing, electronics and food.
He is supported by Andreassen Swedbank.
– The price of electricity and gasoline is already higher than it would be without crown fall. In addition we have seen price increases from Tesla and Apple and some other import products, Andreassen says.
Figures from Statistics Norway show that the price of imported goods rose by 1.2 per cent from November 2013 to November 2014. In the same period last year, inflation was down to 0.2 percent.
Both Bruce and Andreassen underlines that many importers have hedged against exchange rate fluctuations. Thus, not weakening of the krone in recent months immediately turn out in higher prices.
– This includes car imports ears and in some other industries. For example, clothing chains winter collections be hedged against currency losses. When it is first summer collection as affected, says Andreassen.
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