NORWAY: Inflation Pressures Still To Firm For Norges Bank

The details of the December inflation report underscore Norges Bank’s cautious stance, with services ex-rent and food inflation pressures noted. Although the surprise in CPI-ATE versus Norges Bank and consensus was small, 2-year NOK swap rates are still up over 5bps on the session, NOKSEK is now up 0.25% to 0.9170, piercing resistance at the 20-day EMA of 0.9167. 

• On a seasonally adjusted basis using Statistics Norway data, CPI-ATE prices rose 0.3% M/M in December, after 0.15% in November and 0.45% in October. That pulled 3m/3m annualised momentum up to 3.21%, an eight month high.
• Food inflation was an important upside contributor, printing at 4.94% Y/Y (vs 4.24% in Nov), However, rates remain below the Jan-Nov average of 5.41%.
• Domestic goods excluding energy and agriculture ticked rose to 4.04% Y/Y (vs 3.34% prior), while imported goods excluding agriculture was 1.19% Y/Y (vs 0.95% prior).
• Services inflation remains sticky, with services ex-rent rising to 3.98% Y/Y (vs 3.92% prior), the third consecutive acceleration. There was some upside contribution from airfares (4.83% Y/Y vs 2.84% prior), but more durable inflation pressures were still evident elsewhere.
• Restaurant and hotel inflation rose sharply to 5.10% Y/Y after 4.68% prior). Recreation and culture inflation also ticked up despite package holidays inflation remaining unchanged versus November.
• Rents inflation eased a little to 3.63% Y/Y (vs 3.72% prior).