Norway Inflation Was Unchanged Last Month as Growth Slows

Norwegian underlying inflation was unchanged last month as the prospect of a slower expansion in the world’s seventh-largest oil exporter curtailed price growth.

The underlying inflation rate, adjusted for taxes, fees and energy prices, was an annual 1 percent in December, unchanged from a month earlier, Oslo-based Statistics Norway said today. The rate was in line with the median estimate of 11 economists in a Bloomberg survey. Prices rose 0.2 percent in the month. Headline inflation slowed to 0.2 percent from 1.2 percent and compared with the 0.5 percent estimated in a survey.

The central bank, which targets price growth of 2.5 percent, cut its benchmark interest rate by 50 basis points to 1.75 percent last months on concern that Europe’s debt crisis will hurt the economy as export demand wanes. A worsening global growth outlook has hurt consumer confidence in the world’s second-richest nation per capita, pushing it to a 2 1/2-year low last quarter. Retail sales, excluding motor vehicles and petrol stations, rose less than estimated in November.

“There are not many signs of strong domestic inflationary pressures, even though capacity utilization is close to normal levels,” Bjoern-Roger Wilhelmsen, a senior analyst at First Securities ASA, said in a note to clients yesterday. “Imported inflation is depressed by a strong krone last autumn, but recent krone weakness may damp the downward pressures on imported prices in coming months.”

The currency emerged as a haven for investors seeking to avoid the euro-area’s debt woes and after Switzerland capped franc appreciation. The krone hit an 8 1/2-year high against the euro in September. Since then, the krone has lost 2 percent against the euro to trade at 7.6733 at 10:05 a.m. in Oslo.

Statistics Norway has lowered its 2012 growth forecasts for the mainland economy, which excludes oil, gas and shipping, to 2.5 percent from 3.5 percent. The agency forecasts a rise in the country’s unemployment rate to 3.6 percent this year from an estimated 3.3 percent last year.

To contact the reporter on this story: Josiane Kremer at jkremer4@bloomberg.net