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Norway: Airfares pulled up core inflation

Core inflation measured by CPI-ATE came out at 1.5% y/y in March compared to 1.3% in February. Consensus was 1.4% while Nordea’s forecast was 1.3%. Norges Bank’s forecast was 1.4%.

Headline CPI was 0.8% y/y down from 1.2% last month. Consensus was 0.9% and Nordea was 0.8%. Norges Bank was 0.6%

The main surprise this time was airfares where y-o-y growth went from -3% in February to 12% in March. This could of course be an effect of the rise in oil prices which we have not seen any signs of so far. But these prices are extremely volatile and we would not judge this as a sign of a start of a significant rise.

Apart from airfares the picture was broadly as expected. Food prices pulled up while books and clothes pulled down.

Core inflation one tenth above Norges Bank’s forecast should not have any strong effect on its view on rates, especially when the volatile airfares explain between 0.1% and 0.2% points of the rise in core inflation.

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