Norway’s inflation slowed to the weakest pace in seven months in December, in what’s likely to reduce speculation that the central bank will be forced to extend its interest-rate hikes.
(Bloomberg) — Norway’s inflation slowed to the weakest pace in seven months in December, in what’s likely to reduce speculation that the central bank will be forced to extend its interest-rate hikes.
The headline inflation rate declined to 5.9% last month, mainly due to lower electricity prices, data from Statistics Norway showed on Tuesday. That compares with the median estimate of 6.1% in a Bloomberg survey of analysts and Norges Bank’s forecast of 6.0%.
The data comes ahead of an expected acceleration at the start of the year, with food retailers having flagged price-hike plans and rent increases projected in housing. The central bank has said it envisages a slowdown in inflation from March. Last month it forecast one more quarter-point hike in borrowing costs by the end of the first quarter to 3.0%.
Underlying inflation, the measure followed by Norges Bank, still picked up pace to 5.8%. That compares with the 5.7% forecast by analysts and the central bank.
“The deviation from Norges Bank’s forecast is basically too small to significantly change the interest rate outlook,” Marius Gonsholt Hov, Svenska Handelsbanken AB’s chief economist for Norway, said in a note to clients. “There is still every reason to believe that we will get another rate hike in the first quarter.”
–With assistance from Joel Rinneby and Harumi Ichikura.
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