Norwegian inflation came in below Norges Bank’s forecast in August. Slightly below inflation is not sufficient to prevent a September hike, noted Nordea Bank in a research report.
Core inflation slowed down slightly to 2.1 percent year-on-year from July’s 2.2 percent. Consensus expectations was 2.2 percent and Norges Bank’s expectations was 2.3 percent.
As anticipated, food prices dropped sharply on a sequential basis and more than last year. That together with a prolonged summer sale on clothes is the main reason why core inflation fell. Core inflation has been 0.2 percentage point below Norges Bank’s forecast for the last two months.
“That is - all else equal - an argument for a somewhat lower rate path in 2020, but not enough to change Norges Bank’s view for a September hike”, added Nordea Bank.