Norway’s inflation slowed to the weakest pace in seven months in December, cementing the view that Norges Bank will end tightening after one more interest-rate hike this quarter.
(Bloomberg) — Norway’s inflation slowed to the weakest pace in seven months in December, cementing the view that Norges Bank will end tightening after one more interest-rate hike this quarter.
The headline inflation rate declined to 5.9% last month, mainly due to lower electricity prices and the effect of power subsidies, 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 in inflation this month and next, with food retailers having flagged price-hike plans and rent increases projected in housing. Even as core inflation accelerated against the central bank’s estimate of no change, Norges Bank is expected to be reassured by the figures to stick to its forecast of one more quarter-point hike to 3.0%, most likely in March.
“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.”
In neighboring Denmark, inflation slowed for a second straight month, to 8.7%, indicating that price increases have peaked.
Read More: Denmark’s Inflation Rate Falls for Second Month, Suggesting Peak
–With assistance from Joel Rinneby, Harumi Ichikura and Christian Wienberg.
(Updates with markets, Danish data from third paragraph.)
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