NORWAY: Kindergarten Price Change Pulls Down CPI-ATE By 0.3pp

Lower Kindergarten prices reduced CPI-ATE by “approximately 0.3pp” in August, which was broadly in line with the analyst estimates we had seen. However, this meant that CPI-ATE excluding daycare was 3.5% Y/Y, which is only a tenth below the Norges Bank’s June MPR estimate.

• While this suggests underlying price pressures (excluding temporary daycare effects) were probably stronger than expected by analysts in August, the data should still weigh on the September MPR rate path, given inflation remains below the central bank’s forecasts.
• Overall, CPI-ATE was in line with consensus at 3.2% Y/Y (vs 3.3% prior), while headline CPI was a little soft at 2.6% Y/Y (vs 2.8% cons and prior). Headline CPI is thus 1.1 percentage points below the Norges Bank’s June MPR forecast.
• The aforementioned daycare price change pulled down services ex-rent inflation to 2.9% Y/Y (vs 3.8% prior), while rent inflation remained elevated at 4.5% Y/Y (vs 4.3% prior).
• Domestic consumer goods also decelerated to 4.8% Y/Y (vs 5.2% prior), with several categories seeing seasonal declines in prices (e.g. clothing, furniture). Food prices also fell 1.3% M/M, bringing to annual rate to 4.5% Y/Y (vs 4.9% prior).
• Imported consumer goods inflation rose to 2.0% Y/Y (vs 1.4% in July, 2.0% in June), but remains below the June MPR projection of 2.2%.