Most of us feel that there is a little extra sting in the wallet during the day, and it can be difficult to understand why it is like that right now. In particular, it is noticeable that food prices have increased more than wages: Increased food prices The comparison of food prices and wage trends tells us 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, comparison with wage development Food Nov 2021 – Nov 2022 Wage development Forecast for 2022 We have asked news’s economic commentator Cecilie Langum Becker to help us understand a little more of the economic situation, what she thinks we need to prepare for on further, and whether she has any tips for those of us who hardly dare to check our bank account anymore. Why do prices increase during the day? Much of the production, especially in Asia, shut down due to the pandemic – leading to shortages of a number of goods. At the same time, the authorities in many countries poured in money to keep the wheels going – so that the demand for goods remained high. Then came the war in Ukraine and sent energy prices up, making it more expensive to produce and transport goods. The vast majority of us are affected by changes in electricity prices. This is how they look right now: Kwh (Kilowatt hour) means how many thousands of watts a device uses in one hour. Why raise interest rates when many things are already expensive? If the central bank (Norges bank) does not intervene, prices will continue to run even more wildly. The aim of setting up the interest rate is that we will buy less goods so that the prices eventually go down. When prices rise a lot, we can afford fewer and fewer things for the same paycheck, so our purchasing power falls. So even if the central bank also contributes to giving you worse advice now, it has to do something that hurts a little now – so that things will get better in a few years. 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 the electricity charges and when you get electricity support here. A higher interest rate means increased expenses if you have a mortgage. Do we know how high the interest rate will be? Right now it is likely that the key interest rate will rise to around 3 per cent next year, which will give a mortgage interest rate of around 4.3 per cent. 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. When we pay more in interest, who actually gets that money? A little simplified, you can say that much of that money goes to those who have deposits in the bank, i.e. those who save. When the interest rate is set, this does not only apply to money you borrow, but also money you have in the bank. This way you get a little more for the money you save. The state of Norway has a lot of money on the books in the oil fund. Why can’t we spend a little more of that money so that people don’t feel so cramped? The money we earn from the oil is kept out of the day-to-day running of our country, and sent straight into the oil fund. We have a rule where we cannot use more than three percent of the fund each year, which is roughly equivalent to what you can expect to earn from having money invested in shares and fixed income securities each year. In that way, the fund can in theory last forever. Are there any positive effects of the situation we are in? Unemployment in Norway is historically low, which means that the vast majority of people are in work. The fact that housing prices are expected to fall slightly in the future may be good for first-time buyers, who may be able to get into the housing market more easily. At the same time, it is good if our consumption falls, from a climate and environmental perspective. What kind of advice would you give to people who are worried about their personal finances going forward? Take the trouble to sit down and go through your finances. Where does your money go? Make a phone call to your bank and insurance company and try to negotiate down interest rates and insurance premiums. There is much more money to be saved by getting lower interest rates than giving up coffee. Do you need more savings tips to get you through the winter? Check out these articles:
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news explains electricity prices and interest rates and what it means for you – news Norway – Overview of news from different parts of the country
