Company News

Norway’s Central Bank Catches a Break on Inflation in June

Shoppers in Oslo. (Odin Jaeger/Photographer: Odin Jaeger/Bloomb)

(Bloomberg) -- Norway’s underlying inflation rate fell to the lowest level in more than two years, raising prospects that the country’s central bank could reduce borrowing costs before the end of this year. 

The core inflation rate, which excludes volatile items such as energy, fell to 3.4% in June, Statistics Norway said Wednesday. Norges Bank and economists polled by Bloomberg had both expected price annual increases of 3.6%. It was the lowest print since May 2022 and comes after two consecutive months of inflation above forecasts.

While price increases in the fossil-fuel-rich Nordic nation have subsided in the past year, they have been stickier than in many other places, forcing the central bank to postpone planned easing moves even as peers have started reducing borrowing costs.

After its latest policy meeting, Norges Bank raised its forecasts for economic expansion and pay increases this year and next, and said it expects the benchmark rate to remain at 4.5% — the highest level since 2008 — some time into 2025. 

“The disinflationary narrative for Norway continues with this print,” Danske Bank economist Frank Jullum said. “Market impact potential is limited by Norges Bank’s recent guidance but it has made a December rate cut somewhat more likely.”

The krone weakened about 0.4% after the inflation data was released, to 11.5107 versus the euro as of 8:18 a.m. in Oslo.

Headline inflation also slowed more than forecast, to 2.6% in June. The decline was driven by falling prices on package holidays and electricity, the statistics office said.

--With assistance from Joel Rinneby.

©2024 Bloomberg L.P.