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NORWAY: SA CPI-ATE Rises M/M Despite One-off Factors

NORWAY
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Statistics Norway’s seasonally adjusted CPI-ATE index rose 0.23% M/M in August, after 0.15% in June and July. This is a little surprising, as the fall in Kindergarten prices in August was a one-off factor, and thus would not have been corrected for in seasonal adjustment procedures (i.e. it should have pulled the M/M rate lower, all else equal). 

  • However, CPI-ATE inflation momentum on a 3m/3m SAAR basis still eased to 2.50% (vs 2.92% prior). This should add to confidence that the broader disinflation process remains intact.
  • On Thursday, we receive Norges Bank’s Q3 Regional Network Survey (RNS). This will be the last main input ahead of next Thursday’s decision, where a revised rate path will be presented.
  • While the RNS will contain an update on annual wage expectations (and thus feed into the “prices and wages” component of the rate path), the lower-than-expected inflation outcomes since June should help pull down the rate path all else equal.
  • However, whether the Norges Bank makes a dovish tilt in guidance (e.g. opening the door to a rate cut at the end of this year) will also depend on the wider RNS results and the development of the NOK – which remains a concern.
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Statistics Norway’s seasonally adjusted CPI-ATE index rose 0.23% M/M in August, after 0.15% in June and July. This is a little surprising, as the fall in Kindergarten prices in August was a one-off factor, and thus would not have been corrected for in seasonal adjustment procedures (i.e. it should have pulled the M/M rate lower, all else equal). 

  • However, CPI-ATE inflation momentum on a 3m/3m SAAR basis still eased to 2.50% (vs 2.92% prior). This should add to confidence that the broader disinflation process remains intact.
  • On Thursday, we receive Norges Bank’s Q3 Regional Network Survey (RNS). This will be the last main input ahead of next Thursday’s decision, where a revised rate path will be presented.
  • While the RNS will contain an update on annual wage expectations (and thus feed into the “prices and wages” component of the rate path), the lower-than-expected inflation outcomes since June should help pull down the rate path all else equal.
  • However, whether the Norges Bank makes a dovish tilt in guidance (e.g. opening the door to a rate cut at the end of this year) will also depend on the wider RNS results and the development of the NOK – which remains a concern.