Inflation Trends Present Positive Outlook for Norges Bank, Says Chief Economist Kjersti Haugland
Oslo – Inflation figures continue to be a source of optimism for Norges Bank, according to Kjersti Haugland, the chief economist at DNB Carnegie. The recent data shows a slight uptick in price growth, indicating a resilient economic landscape.
A stroll through a grocery store in Oslo reveals the fluctuating landscape of consumer goods. Recent statistics released by Statistics Norway indicate that the consumer price index (KPI) saw a year-on-year increase of 3.6 percent in September, up from 3.5 percent in August.
This modest rise is largely attributed to the ongoing developments in food and energy prices, particularly fuel and electricity costs which have played a crucial role in elevating inflation rates.
Haugland notes, “The decline in core inflation wasn’t anticipated; in fact, it’s positive news for Norges Bank. It allows them to feel more at ease with the interest rate cut made during the previous meeting.” Reflecting on expectations prior to the latest figures, economists had anticipated inflation trends to stabilize or potentially increase slightly.
Expectations on Future Interest Rates
Looking ahead, Haugland suggests that the next interest rate adjustment is likely to occur in June 2026. This sentiment is echoed by Marius Gonsholt Hov, chief economist at Handelsbanken, who adds that a deviation of even 0.2 percent in core inflation represents a significant development for the central bank.
Despite this positive news, both economists caution that the decline in core inflation has not fundamentally altered Norges Bank’s outlook on future interest rates. As Haugland points out, “For any real shift in perspective regarding rate adjustments, we would need to witness a clear trend change.”
Food Prices: A Mixed Bag
On the consumer front, the analysis reveals a mixed bag in food prices. While overall prices for food and non-alcoholic beverages dipped by 0.8 percent from August to September—a typical seasonal trend—year-on-year figures show a notable increase of 6.3 percent.
Chocolate, coffee, meat, and vegetables have surged in price, while staples like salmon, bananas, and olive oil have seen declines. Statistics Norway highlights that this seasonal decrease in food prices is not uncommon during autumn.
Inflation: Above Target
It’s important to note that even with these adjustments, inflation remains significantly above Norges Bank’s target of around two percent. Observers attribute this persistent inflation, in part, to robust wage growth across the country.
Norges Bank has commenced a new phase of interest rate cuts following several years of hikes, marking its second cut in 2025 just last month. “While the challenge of curbing inflation is ongoing, we’re carefully managing the pace of these changes to ensure we don’t stifle economic growth unnecessarily,” remarked Central Bank Chief Ida Wolden Bache during the recent rate cut announcement.
As Norway navigates through these economic currents, the delicate balance between inflation management and economic growth remains a focal point for the central bank and policymakers alike. The months ahead will be crucial as they monitor the ongoing developments in price dynamics and their potential impact on monetary policy.