NORWAY
There may be downside risks to today's Norwegian August inflation data (due 0700BST/0800CET), with a reduction in monthly kindergarten prices as of August 1 dragging both headline and core inflation lower. Although final expectations for Norges Bank’s upcoming rate decision (next Thursday) should account for the Q3 Regional Network Report (this Thursday), another downside surprise in inflation will increase pressure on the bank to guide for a rate cut in late-2024 in its revised rate path. The June MPR rate path looks for a cut only in early 2025.
- Analyst consensus sees CPI-ATE inflation at 3.2% Y/Y in August. Such an outcome would keep Norges Bank’s June MPR forecast error constant at -0.4pp.
- However, some forecasts may not have accounted for a reduction in the maximum monthly kindergarten price (from NOK3,000pm to NOK2,000pm) as of August 1. The press release from Statistics Norway was relatively well-hidden (only available in Norwegian, and not on the front page of the website). Daycare has a 1% weight in the CPI basket, per the stats office.
- This effect will only be temporary though, dropping out of the annual comparison in August 2025. The weight of Daycare will also be reduced from next year.
- Other components (e.g. furniture, clothing, transport, food) are also expected to see seasonal falls in prices in August.
- Headline CPI is expected at 2.8% Y/Y, well below the 3.7% June MPR forecast.
- JP Morgan stands out with notably below-consensus projections for headline and core CPI (see image below for a selection of analyst comments).
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