VIEW: Nordea Now See Hike In December

Nordea write “Norwegian core inflation came in at 6.0 % y/y in October from 5.7% y/y in September. Norges Bank expected core inflation at 6.0% y/y while consensus was at 5.6%. We expected 5.3% y/y as we believed food prices would continue to fall. We were wrong. Food prices rose 0.7 % m/m due to the phasing out of numerous price campaigns especially on fish products, which was one of the main drives behind the rise in Core CPI. Other categories that contributed to the rise were furniture and transportation.”

• “Looking at headline inflation, it rose to 4.0% y/y from 3.3% y/y in September. Norges Bank expected 4.4% y/y. The rise in headline was expected as both spot electricity prices and network tariffs rose in October. Marginally lower fuel prices m/m slowed the rise.””
• “Given the latest CPI print, Norges Bank will likely disregard the fall we saw in September. This means that a December hike is fully on with the NOK now around 4.5% weaker than expected. We now expect Norges Bank to hike in December.”