NORWAY
As noted earlier, the December inflation data is unlikely to shift expectations away from a Norges Bank cut in March. Inflation momentum (on a 3m/3m SAAR using Statistics Norway data) ticked up to 3.0% from 2.5% in December, its second consecutive acceleration. This was largely a result of the soft September reading (0.08% M/M) falling out of the numerator calculation. On a sequential monthly basis, December inflation at 0.15% M/M is consistent with the 2% target.
- Lingering underlying inflation pressures remain domestically driven. Services inflation ticked up to 3.8% Y/Y (vs 3.5% prior), with rents, healthcare, transport and communications components all accelerating on an annual basis.
- Domestic goods inflation (ex-energy) eased to 4.7% (vs 5.2% prior), but remains elevated.
- Meanwhile, imported goods inflation remains soft, printing at 0.5% Y/Y (vs 1.0% prior, and below Norges Bank’s 0.6% projection). The consistent disinflation in imported goods has been impressive, considering the weakening trend in the krone through 2024.
- The soft headline print was partly driven by soft electricity and fuel readings. Electricity prices fell 0.8% M/M, corresponding to a -10.9% Y/Y rate (vs -10.5% prior). Solid fuel inflation was -5.8% Y/Y (vs -3.0% prior).
- Statistics Norway notes that discount campaigns are prevalent in November and December. The January print will be an important barometer of underlying inflation pressures, with price resets likely across various services components.
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