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Erik Johannes Bruce, analyst at Nordea Markets, notes that the Norway’s core inflation in April came in at 2.6% y/y compared 2.7% in March, against the consensus of 2.5% and Nordea was 2.4% while Norges Bank was 2.3%.

Key Quotes

“The main reason why inflation fell less than we had expected was airfares. They rose 23.2% m-o-m. It pulled up core inflation by 0.2% points. A rebound in prices on books and a sharp rise in package holidays also pulled up, but that was more in line with expectations. Apart from that the picture was much as expected. Food, furniture etc., clothes, hotel and restaurant all pulled down, together about 0.4% points.”

“Inflation 0.3% points above forecast is enough to have a significant impact on Norges Bank rate path. But there were a lot of temporary Easter related effects on work here. What that means for the coming month is not obvious.”

“First impression is that Norges Banks forecast for May at 2.5%, which we receive before the June meeting, does not look that bad. Maybe we end slightly above, but probably not as much as this months. We might see a small lift to the path from inflation, but NOK will have much stronger impact given today’s level.”