Norway's core inflation allows to weakest pace since 2022, strengthens case for rate cuts
The Nordic country's economy has fared better since last autumn
Norway's underlying inflation hit its weakest pace in more than a year in January, likely fueling bets that the country's central bank will start to cut borrowing costs sooner than planned.
The core inflation rate, which excludes volatile items such as energy, fell to 5.3 per cent last month - the lowest level since September 2022, according to data published by the statistics office on Friday.
That's in line with the median forecast by analysts, while Norges Bank had projected a 5.4 per cent pace.
Norway's inflation is still among the fastest in Western Europe, according to Eurostat data, as the weakness of the krone is feeding imported price increases and wage growth remains near multi-year highs. Norges Bank kept borrowing costs at a 16-year high of 4.5 per cent last month and repeated that a tight monetary-policy stance will have to be maintained "for some time ahead."
The Nordic country's economy has fared better since last autumn than those of its regional peers, largely thanks to a robust performance of its fossil fuel-linked sectors that has outweighed weaker construction and retail. With employment staying stronger than the central bank has forecast, the Labor-led minority government expects a soft landing.
The headline inflation rate also slowed to 4.7 per cent, largely in line with the analysts' forecast of 4.6 per cent and the central bank's view of 4.8 per cent. The development was helped by prices of cars and fuel where gains from the year-ago period were replaced by a decline in January.