It is 8 pm and Ole Jakob Steinvoll is sent by his roommate to Rema 1000 in Lars Hilles gate in central Bergen. He doesn’t have far to go to find discounted goods. He just needs to cross the street. – This is really cheap, says the 25-year-old in front of the podium hall with Easter soda. Norwegian food customers have had to endure fresh price jumps for a long time. But now it seems that things have turned around. Last month the prices fell, which is sensational at this time. – It is very unusual for food prices to fall in February. We haven’t seen that since 2001, says section leader Espen Kristiansen at Statistics Norway (SSB). Cheaper chocolate, more expensive fruit According to their figures, it was promotional campaigns that made food in shops 0.7 per cent cheaper in February than in January. Some examples: Bread: down 2.3 per cent Fresh meat: down 1.3 per cent Ready-to-eat pizza: down 8 per cent Chocolate: down 8.6 per cent Healthy food such as fruit, on the other hand, became more expensive: Terese Petersen mostly follows when breast milk substitute is available . Photo: news Also in Ålesund, news finds customers who like the price tags they now see in the shops: – It’s very good to hear. Many families and students will be grateful for that, says Selma Nupen. Leander Ness, who buys “a bit of steak and pizza now and then”, thinks it is good that the prices will be lower. – I have an app on my mobile, so I follow the offers. Now it is mostly breast milk substitute, says Terese Petersen. Striking price drops According to the industry, price cuts have been strongest on heavily traded products such as meat dough and milk. According to Statistics Norway, it is the price drop on chocolate and pizza that is most striking. While the shops are dumping the price of sweets, the price of healthy fruit has gone up in the last month. Photo: Benjamin Dyrdal / news But cheaper food in the last month does not at all mean that price growth in Norway has stopped. It has only slowed down a little, because the fall in food prices dampened price growth. The aggregate price increase – i.e. the consumer price index (CPI) – over the past twelve months landed at 4.5 per cent in February. In January, it was 4.7 per cent. A key question is whether and when such a price development causes Norges Bank to reduce the interest rate. Believe in interest rate cuts in September Economists are not entirely in agreement. – These figures will affect when we get the first interest rate cut, says senior economist Sara Midtgaard at Handelsbanken. She says price growth is decreasing faster than what Noregs Bank has already assumed. – We see clear signs that this is going down towards the inflation target of 2 per cent in the long term. Then Norges Bank can feel safe in cutting the interest rate gradually. What I see is that international producer prices, especially for food, have decreased very quickly. I think that will affect price growth here at home in Norway, too. She has a forecast that the first interest rate cut will come in the third quarter, i.e. around September this year. Senior economist Sara Midtgaard expects that Noregs Bank will cut the interest rate already in September. Other economists reject this. Photo: Håvard Greger Hagen / news Usemje among economists Chief economist Kjetil Olsen at Nordea believes, on the other hand, that Norges Bank will wait until December. – Price inflation is still far too high. It was everyday products that mainly contributed to this surprise. There are probably some seasonal effects here, too. I think Norges Bank is afraid that the krone exchange rate will weaken again if they become too eager to cut interest rates. Economist Olav Chen at Storebrand is even more pessimistic on behalf of Norwegian loan customers. He expects another rate hike in December. – Norges Bank manages according to inflation. Core inflation is sky high above that. In that sense, Norges Bank’s inflation battle is not over yet, he believes. Tom Balgaard / Tom Balgaard/news Kjetil Olsen, chief economist at Nordea – We do not think that the interest rate cut will come earlier than December. Because this is just one number. Norges Bank has signaled that they want to be patient. We are entering into a salary settlement which points in the direction of a salary increase of perhaps around 5 per cent. It is much higher than what is needed to get inflation of 2 percent. So for the time being, we are sticking to the forecasts for the first interest rate cut in December. Håvard Greger Hagen / news Sara Midtgaard, senior economist at Handelsbanken – We believe that Noregs Bank was pleasantly surprised to see these figures. Food prices are usually adjusted upwards in February, but in the coming month we can see that the rise in prices of imported consumer goods in particular will contribute to reducing the annual growth in the consumer price index here at home. Seen in the light of the cost pressure we have in the Norwegian economy, we think that, in isolation, this contributes to earlier interest rate cuts. Silje Rognsvåg / news Olav Chen, economist at Storebrand – Norges Bank must raise interest rates further, among other things to counter the weak krone. There is an underestimated one-to-one correlation between the weak Norwegian krone and inflation six to nine months ahead. If they raise interest rates further, it will probably strengthen the krone, too. This will lead to imported inflation coming down in the future. So it is likely that Norges Bank will follow up with a new interest rate hike in December. – Take the cheapest soft drink Regardless of what happens to rent this autumn, Steinvoll is now happy that sweets in particular have become cheaper in February. – I have a roommate who drank Pepsi Max. But it is more expensive, so I thought I should try something new. That’s why I’d rather buy a pack of Solo Super, he smiles. In the middle of the floor in front of the milk counter is a stack of both varieties, both of which are on sale. – You take what is cheapest. And then it’s Easter. Soon, says Steinvoll.
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Food prices dampen price growth in February 2024 – may result in interest rate cuts in the autumn – news Vestland
