Norway: Headline and core inflation accelerate more than anticipated in February
Latest reading: Inflation came in at 3.6% in February, up from January’s 2.3%. February’s result marked the highest inflation rate since April 2024 and topped market expectations. Looking at the details of the release, the acceleration was driven by rising price pressures for food, housing and utilities, plus transportation.
Still, the trend pointed down, with annual average inflation falling to 2.9% in February (January: 3.0%). Meanwhile, core inflation rose to an eight-month high of 3.4% in February from the previous month’s 2.8%. February’s print overshot both market and Norges Bank projections.
Lastly, consumer prices increased 1.41% in February over the previous month, accelerating from the 0.22% rise recorded in January. February’s figure was the highest reading since September 2008.
Outlook: Our Consensus is for headline inflation to ease from February’s level going forward and average slightly above January’s levels in H1. Overall in 2025, inflation will wane from last year, pressured by tight monetary policy, a high base of comparison and softer real wage growth. Still, our panelists see inflation marginally overshooting Norges Bank’s 2.0% target through our forecast horizon to 2029, fanned by fast private consumption growth. Higher imported inflation due to protectionist policies is an upside risk, while the strength of the krone is a two sided-risk. The timing and pace of monetary policy easing are factors to monitor.