(Bloomberg) -- Norway’s underlying inflation eased to its lowest level in more than two years, offering policymakers reassurance that could advance the case for an interest-rate cut.
The pace of core consumer-price growth, which excludes volatile items such as energy, declined to 3.3% in July, the least since April 2022, according to data from the statistics office on Friday.
That outcome — the last key data ahead of a rate-setting meeting next week — was lower than the median forecast of economists surveyed by Bloomberg, which anticipated inflation to stay at 3.4%.
It’s also noticeably less than the 3.7% level projected by Norges Bank, which is among the few central banks in the wider region not to have begun lowering borrowing costs.
Weakening price pressures could help persuade officials to consider cutting rates costs sooner than currently envisaged.
In June, they delayed the projected start of easing until 2025 on worries that the energy-rich Nordic economy hasn’t cooled as much as expected. Since then, the weakening of the krone, the worst performer among the world’s 10 most-traded currencies this year, has added to the case for caution.
“Today’s inflation data increases the probability for a rate cut in December,” DNB Bank ASA’s senior economist Kyrre Aamdal said in a report. Even so, the krone’s weakness “may contribute to higher inflation further down the road. We thus believe Norges Bank will stick to its guidance from June at the meeting next week.”
The headline inflation rate rose to 2.8%, in line with economists’ estimates. The acceleration was the first since November, because electricity prices fell by less than they did a year earlier.
Average wage increased last quarter at the slowest clip in a year, while the annual pace of 5.4% still exceeded the central bank’s projection for the full year, the statistics office said on Thursday.
--With assistance from Joel Rinneby.
(Updates with analyst comment in seventh paragraph)
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