Nomura See CPI Report as Less Hawkish Than Initially Appears

• Nomura write that the CPI release supports their forecast that Norges Bank will hike three more times by 25bp bringing its policy rate to a terminal level of 4.50%. They write that the rise in recreation and culture price inflation is concerning because this is less volatile and is affected more by wage dynamics in the economy.

However, they add a number of reasons why the inflation release may not be as hawkish as the headlines suggest:

1. The upside surprise was driven largely by volatile food price inflation, and the NB discuss ex-food price measures in their MPR.
2. Services price inflation was flat, consumer goods inflation clearly on disinflationary path.
3. Seasonally-adjusted inflation for clothing, miscellaneous goods & services, household goods and hospitality only contributed marginally to inflationary momentum.