Is price inflation stuck at a very high level? Is it the case that inflation is finally slowing down more than expected? The answer to these questions will help determine what Norges Bank does next week. Then the central bank can raise its key interest rate for the ninth time since autumn 2021. Inflation in December was still close to the highest levels since Statistics Norway started producing the consumer price index in 2001. The figures show that consumer prices increased by 5.9 per cent from December 2021 to December 2022. The main explanation for price inflation now falling is lower electricity prices. 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 key interest rate means increased expenses if you have a mortgage. The Consumer Price Index was created after the Stoltenberg government in 2001 gave the central bank the task of setting the key interest rate according to a target for how much prices rise over time. Today, Norges Bank manages according to a target that prices should increase by 2 per cent a year. If inflation is above this target, it means that the interest rate will rise further. A higher interest rate slows down the pace of the economy. A lower interest rate has the opposite effect. Core inflation is the price increase measured if you remove the price changes for electricity and fuel. Core inflation has increased by 5.8 per cent from December 2021 to December 2022, marginally higher than Norges Bank’s latest estimate. 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 past year, compared with wage developments Food Dec 2021 – Dec 2022 Wage developments Forecast for 2022 In its latest monetary policy report from December, Norges Bank predicted that inflation in December would land at 6 per cent and the so-called core inflation would fall to 5, 7 percent. The same was done by an average of the analysts who normally prepare forecasts for inflation, according to Handelsbanken markets. However, the country’s largest financial group, DNB, predicted that core inflation would fall to 5.4 percent. Espen Kristiansen is head of section at Statistics Norway with responsibility for the consumer price index. Photo: William Jobling / news
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Consumer prices rose – news Norway – Overview of news from various parts of the country
