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Erik Johannes Bruce, Research Analyst at Nordea Markets, notes that Norway’s core inflation in September came in at 1.9% y/y as in August against the Nordea and consensus of 1.8% while Norges Bank’s forecast was 1.6%.

Key Quotes

“The main reason why inflation ended up slightly above our forecast was that prices on furnishing etc. climbed much more than expected. It pulled up core by 0.2% points. Add to this that most consumer groups pulled up this time. The exception being clothes which pulled down and more than we had expected. Transport was also slightly lower.”

“The reason why Norges Bank gave little weight to the current low inflation at the September meeting was that it saw the surprisingly high August figure as a fluke. It was not a change in its reaction function, meaning that it ignored current inflation.”

“Today’s figure argues against the August figure being a fluke and for an upward revision to the rate path in December.”