Sell-side Views Ahead of September CPI

Norway September CPI is released tomorrow and is the only inflation print between the September and November Norges Bank meetings.

• Current consensus is for CPI to print at 4.0% Y/Y (Prev. 4.8%), 0.7% M/M and CPI-ATE at 6.1% Y/Y (Prev. 6.3%), 0.7% M/M.
• Norges Bank have signalled that they will hold rates steady on November 2, and will likely hike once more in December.
• The September MPR noted that the inflationary peak has likely passed, and forecasted September CPI at +4.2% Y/Y and CPI-ATE at +6.1% Y/Y.
• Unless tomorrow's print shows a large downside surprise, it is unlikely to push Norges Bank off their pre-signalled path. A large upside surprise would reinforce the case for a December hike, but would likely not prompt a November hike given there will have only been one CPI print between meetings.
• Below, we summarise a number of sell-side views ahead of tomorrow's print:

Bank of America: CPI 4.3% Y/Y, 0.9% M/M; CPI-ATE 6.0%, 0.7% M/M

Barclays: CPI-ATE 5.9% Y/Y, 0.6% M/M

Danske Bank: CPI-ATE 6.1% Y/Y

DNB: CPI 4.1% Y/Y; CPI-ATE 6.2% Y/Y

• They note that core inflation generally rises in September, due to the end of summer sales and introduction of new collections in clothing, furniture and decoration.
• The depreciation of NOK over the year may push the above components up by more than usual.
• Education prices usually only rise in September, and may be pushed up more than usual by wages, while food prices are not expected to fall as they normally would.
• The CPI print will be driven by the fall in spot electricity prices.

SEB: CPI 4.0% Y/Y; CPI ATE 6.2% Y/Y; CPI ATE ex-food, alcohol and tobacco 5.3% Y/Y

• Expect food prices to rise slightly, at odds with the usual seasonal pattern (+0.5% M/M NSA; +1.0% M/M SA).
• Headline will be dragged down by electricity prices, which are below the Government support level and fell sharply in September.

Handelsbanken: CPI-ATE 6.1% Y/Y

• Expect inflation to fall following another base effect. Handelsbanken's model "based on the various sub-components of the CPI-ATE has, on average, fallen below the CPI-ATE", indicating core price pressures.
• They note that the fall in energy prices "implies a softening of cost pressures and thus also selling prices".
• Still see a long way to go to get inflation to target, owing to contributions of wages and unit profit to inflation.