Ever since this summer, there has been a pessimistic mood over the country when it comes to the economy. Expectations surveys of both companies and households have been gloomy. People have almost never had such bad faith in their own finances. Nevertheless, the hard numbers have shown time and time again that things are actually going quite well. Norwegians have proven to be much more economically robust than experts and forecasters had imagined in advance. Policy rate in percent The policy rate is set eight times a year by Norges Bank. The policy interest rate governs the interest rates in the banks, and affects your housing costs. The aim of raising the interest rate is for the high prices to come down again. The forecast tells us how Norges Bank thinks interest rates will develop in the future. Read more about sources and reservations here. A higher policy rate means increased expenses if you have a mortgage 2021 2022 2023 2024 2025 2026 Forecast Norges bank This can’t be right? I have followed the figures with great curiosity, where there has always been a kind of feeling that “this can’t be right?” – and “then this must be temporary?”. The “big bang” must come soon, right? Because there is no doubt that Norwegian households have had their plates loaded with increased costs. Both literally, and indirectly: 2022 was characterized by many, and relatively large, interest rate increases from Norges Bank. In total, we were served six interest rate hikes, three of which were double. In one year, the key interest rate went from 0.5 per cent to 2.75 per cent. In March, Norges Bank raised the interest rate further to 3 per cent, and we will probably get two more interest rate hikes. The Consumer Price Index (CPI) rose 5.8 per cent from 2021 to 2022, a level that has not been measured since the 1980s. In January, the annual price increase was seven percent. The krone exchange rate has been weak throughout 2022, and has had an even weaker start to 2023. This means that everything we import from abroad will be more expensive to buy. In this way, we import high price growth, which helps to keep price growth high here at home. The electricity price has been high, even though the electricity subsidy has taken away a lot. Increased food prices The comparison of food prices and the wage trend says something about whether you get more, less or the same amount for your money. When the development of food prices is higher than the development of wages, it means that food has become more expensive. Both figures are averages for the specified period. Read more about sources and reservations here. How much food prices have increased in the last year, in comparison with wage development No collapse – for now One would therefore perhaps think that 2023 would be the year of the big private economic bangs, with a full collapse in the housing market and the saving knife at the throat. The housing market keeps cooking. Photo: Vegard Wivestad Grøtt / NTB scanpix A picture is beginning to emerge that it is quite far from the truth. The most startling thing I read in this regard was in DN a little while ago, where the head of the travel search engine restplass.no was interviewed. He could say that he sees “no signs that interest rate increases, a weak krone or uncertain economic forecasts are slowing down people’s desire to travel”. He sees NO SIGNS. Zero. Nor does the general manager of the tour operator Escape Travel, Gunnar Grosvold, notice anything. He has been in the industry since the 1980s, but “never experienced anything close to this”. Despite the record weak krone, he has “never sold better than we do now”. In Ving, too, they notice that it is the best and most expensive that is sold first, and that the speed in Norway is significantly higher than in our Nordic neighbours. Running our shoes off You get a little blown off the track when you read things like this. In a year where the euro costs well over NOK 11, and the electricity bill, the interest bill and the trip to the grocery store are more expensive than ever, we are running off our shoes to go on a summer holiday abroad. Even if the evidence is somewhat anecdotal, there are nevertheless enough figures to support the impression that Norwegians do not struggle financially as much as many might think. House prices have been higher than expected, after a mini-downturn in the autumn. In February, house prices showed an increase of 1.5 per cent, a sign that households are better equipped to cope with interest rate increases than had been thought. Retail sales, i.e. the figures that measure Norwegians’ desire to shop, are ticking upwards. In February there was a small rise of 0.2 per cent, after a rise of 1.3 per cent in January. The figures may not be huge, but they must be read in the light of the fact that we are also spending more money on services – which in sum means that we continue to spend quite a lot of money into the economy. So what is the reason? Firstly, the labor market has remained at a record high. There is still a shortage of labor in some industries, and unemployment is low. Recent figures from Nav for March show that 53,500 are registered as completely unemployed, which amounts to 1.8 per cent of the workforce. This means that Norwegians are in work and have stable incomes. Secondly, Norwegians probably still have some of the money they saved during the pandemic. According to Statistics Norway, we saved NOK 220 billion in 2020 and NOK 233 billion in 2021. In comparison, we saved NOK 115 billion in the year before the pandemic and NOK 63 billion in 2022. That will be NOK 84,000 in saved funds for each and every Norwegian in the two years 2020 and 2021. These figures can also be found in the approximately two million customers at DNB, who in 2021 had deposits of NOK 480 billion – and NOK 564 billion in 2022. So now we are going from a period where we saved a lot to saving little – so that our consumption becomes more stable than the change in purchasing power would suggest. In other words, when savings fall, it acts as a kind of buffer for consumption. And the buffer has not been used up, there are still many billions left. Interest calculator The calculator uses the formula for annuity loans to calculate your monthly costs. Nominal interest is used here. This means that there will be an additional transaction fee which will vary from bank to bank. Today’s interest rate is taken from DNB’s mortgage interest rate for young people, and different banks will have different interest rates. The figures given here will therefore be approximate for you. Monthly expenses are interest and repayments combined. Read more about sources and reservations here. See how much you have to pay if the interest rate increases.
ttn-69
Record high interest rates and price growth, but Norwegians are not cutting corners – Statement
