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NORWAY: Wage Committee Revises 2025 Inflation Estimate 0.2pp Higher to 2.7%

NORWAY

The Norwegian Technical Calculation Committee for Income Settlements (TBU) revised its 2025 inflation estimate 0.2pp higher to 2.7% from the initial estimate provided in February. There was little net change in NOK crosses to the revision, with yesterday's CPI report still the main driver of recent hawkish Norges Bank repricing. The inflation estimate will nonetheless form a basis for this month's 2025 union wage negotiations.

  • Taken alongside the 1.8% wage overhang estimated in February, this suggests a rough 4.5% nominal anchor for wage negotiations.
  • The outcome of the negotiations will be an important input to Norges Bank's March MPR rate path, and the upward inflation estimate adds slight upside risks compared to the February vintage. The Q4 Regional Network survey, due March 20, will also contain updated wage expectations that will feed into the rate path calculation.
  • Norges Bank projected 2025 wage growth at 4.2% in the December MPR, while the Q4 Regional Network Survey had a 4.5% expectation.
  • TBU notes that "The upward adjustment is related to the fact that price increases in February were higher than expected, especially for food products. It is assumed that the increase in the twelve-month growth rate for the CPI is largely temporary. Apart from the changed quarterly pattern for electricity prices, the Committee has not made significant changes to the assumptions for the calculations."
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The Norwegian Technical Calculation Committee for Income Settlements (TBU) revised its 2025 inflation estimate 0.2pp higher to 2.7% from the initial estimate provided in February. There was little net change in NOK crosses to the revision, with yesterday's CPI report still the main driver of recent hawkish Norges Bank repricing. The inflation estimate will nonetheless form a basis for this month's 2025 union wage negotiations.

  • Taken alongside the 1.8% wage overhang estimated in February, this suggests a rough 4.5% nominal anchor for wage negotiations.
  • The outcome of the negotiations will be an important input to Norges Bank's March MPR rate path, and the upward inflation estimate adds slight upside risks compared to the February vintage. The Q4 Regional Network survey, due March 20, will also contain updated wage expectations that will feed into the rate path calculation.
  • Norges Bank projected 2025 wage growth at 4.2% in the December MPR, while the Q4 Regional Network Survey had a 4.5% expectation.
  • TBU notes that "The upward adjustment is related to the fact that price increases in February were higher than expected, especially for food products. It is assumed that the increase in the twelve-month growth rate for the CPI is largely temporary. Apart from the changed quarterly pattern for electricity prices, the Committee has not made significant changes to the assumptions for the calculations."