From October to November this year, inflation (CPI) fell by 0.2% to 6.5%. Price growth has therefore narrowed by a full percentage point year-on-year since October, when it was 7.5%. We have to go back to August to find the last time inflation was 6.5%. The harmonized consumer price index, used for comparison with other European countries, was 7.3%.
From a historical perspective, inflation is still high. According to Statistics Norway’s head of section Espen Kristiansen, the main reasons for the still high price increase in November are the prices of food, electricity and fuel.
The main reason for the decline in inflation is attributed to a weaker increase in electricity prices from October to November this year, compared to last year. Electricity price increases, including online rentals, rose 1.5 percent from October to November. The annual growth of electricity including network rents was 12.7 per cent in November.
“The reason for this increase is that spot electricity prices in the northern price areas increased quite a lot in November. However, the prices were not high enough to qualify for electricity support, and therefore this is fully reflected in the price increase,” says Kristiansen in the SSB press release.
The prices of fuel and lubricants decreased by 4.0% from October to November of this year. The twelve-month change from November last year to November this year ended at 26.8 per cent. Diesel and petrol prices fell 3.1 and 6.0 percent respectively from October to November.
Core inflation has also declined
The annual growth of core inflation (CPI-JAE, CPI excluding tax changes excluding energy) also decreased, standing at 5.7% in November. It is 0.2 percentage point lower than the preliminary October peak of 5.9%.
Among the goods and services groups that experienced the strongest price increases and contributed significantly to the year-on-year change in the CPI-JAE last month are food, furniture, hotel and restaurant services, and automobiles.
Statistics Norway also believes that the decline can be seen in the context of bidding campaigns such as black week. Among the groups of goods and services that decreased in price from October to November, we find home textiles such as bed linen, towels and the like, as well as household appliances and sports equipment.
Norges Bank expected core inflation of 5.0% in November, the same expectation in October. Actual data from Statistics Norway showed the central bank underreported as core inflation stopped at 5.9%. Handelsbanken anticipated it would close at 6.0%.
Norges Bank’s report came out of the regional network on Tuesday this week. It showed a sharp decline in growth prospects for the Norwegian economy. Incidentally, the majority of companies believe that inflation will decrease in the future. The leading indicator fell to minus 0.57%. It indicates that continental GDP will decline by 0.3% over the next two quarters, estimates senior economist Sara Midtgaard of Handelsbanken Capital Markets.
