NORWAY: Disinflationary Progress In September Underlying Metrics

There was a broad-based pullback in Norges Bank’s underlying inflation metrics in September, reinforcing the conclusions from this morning’s release. We maintain that, while the September data was dovish on net, Norges Bank will need to see more evidence of declining underlying price pressures before deviating from its cautious stance, particularly with mainland demand still relatively resilient.

• A reminder that September CPI-ATE inflation was 2.98% Y/Y (vs 3.07% prior), below the 3.1% consensus and 3.2% Norges Bank projections.
• Summarising the three underlying metrics published by Norges Bank:
  • CPIXE (CPI adjusted for tax changes and excluding temporary changes in energy prices) fell one tenth to 2.6% Y/Y, down from 2.7% in each of June, July and August.
  • The 20% trimmed mean of CPI-AT fell three tenths to 3.2% Y/Y, now back in line with June’s levels.
  • The weighted median also fell three tenths to 3.4% Y/Y, the lowest since May 2022.
• NOK still underperforms the G10 basket intraday, a combination of the inflation data and a pullback in Brent crude futures (amid the Israel-Hamas Gaza agreement and early signs of compliance with the deal). NOKSEK is now down 0.45% on the session. Initial support is the October 6 low at 0.9399.