Surprising news about inflation in Norway. What will Norges Bank do?

Consumers in Norway paid on average 2.7 percent more in February than a year earlier. This is 0.9 percentage points less than in January. Core inflation (CPI-JAE) was 3.0 percent. The decrease in the rate of price growth was related, among other things, to energy, food, furniture, and transport.

The biggest impact on the slowdown in price dynamics came from energy. Electricity prices, including grid fees, rose by 1.1 percent month-on-month in February. A year earlier, the increase in the same period was 12.6 percent. As a result, the annual rate of energy price growth dropped significantly. In February, energy prices were 1.8 percent lower than a year earlier.

Food prices also grew more slowly. From January to February, they increased by 0.9 percent. A year earlier, the increase in this period was 2.1 percent. As a result, the annual rate of food price growth fell for the second month in a row. According to SSB, this is the lowest increase in food prices in almost four years.

Transport prices also contributed to the slowdown in inflation. This applied to air, sea, and road transport. Prices increased in February compared to January, but less than a year earlier. This limited the annual price dynamics in this category.

Declines were also recorded in some durable goods. Prices of furniture and home furnishings decreased by 0.7 percent month-on-month. Year-on-year, they were 0.7 percent lower. Fuel prices also fell. Gasoline became 3.2 percent cheaper, and diesel 1.7 percent cheaper month-on-month.

At the same time, some categories are still maintaining inflationary pressure. In February, prices for clothing, rents, and information and communication equipment increased. Rents were 3.8 percent higher than a year earlier. The CPI index rose by 0.6 percent between January and February. The next interest rate decision in Norway is scheduled for March 26.