Norwegian underlying inflation accelerated more than estimated in May, boosted by air travel costs and rising food prices.
Annual underlying inflation, which adjusts for taxes, fees and energy prices, was 1.4 percent in May, compared with 0.7 percent in April, Oslo-based Statistics Norway said today. It was estimated to be 1.1 percent in a Bloomberg survey of nine economists. Underlying consumer prices rose 0.4 percent from April, the agency said.
Norges Bank Governor Oeystein Olsen has lowered the bank’s benchmark deposit rate 0.75 percentage point since December to 1.5 percent, after krone gains slowed inflation and austerity measures in Europe hurt export demand. The bank expects underlying inflation to remain below its 2.5 percent target through 2015, according to its latest monetary policy report.
“Strong domestic growth, a weaker krone and higher wage growth than Norges Bank expected in March are arguments for an upward revision of the interest rate path on June 20,” said Ida Wolden Bache, an economist at Svenska Handelsbanken AB in Oslo, in a note. “If anything, today’s inflation numbers strengthen the case for a higher interest rate forecast.”
The krone strengthened less than 0.1 percent to 7.5714 per euro as of 10:55 a.m. in Oslo.
Headline inflation was 0.5 percent in the year and was unchanged in the month.