Norwegian Inflation Rate Unchanged in June as Krone Weakened

Norway’s underlying inflation rate was unchanged in June as the krone weakened amid signals of further easing from the central bank.

The rate, adjusted for taxes and energy prices, held at 1.4 percent in June, Oslo-based Statistics Norway said today. The rate was estimated to remain at 1.4 percent, according to the median forecast of seven economists in a Bloomberg survey. Underlying consumer prices fell 0.3 percent in the month.

Norges Bank estimated an increase in inflation to 1.5 percent last month, “so the figures are slightly on the weak side,” Katrine Boye, senior economist at Nordea Bank AB, said in an e-mailed note. As long as the krone stays at current level, “the probability of a rate cut in September is very small,” she wrote.

Policy makers at Norges Bank held the benchmark deposit rate unchanged at 1.5 percent on June 20 and signaled an increased chance of easing this year amid slower-than-projected inflation. The krone has weakened 3 percent since June 19. The strength of the currency has helped keep inflation below the bank’s 2.5 percent target since 2009.

The krone gained 0.5 percent to 7.8564 per euro and was 0.7 percent stronger at 6.1337 per dollar as of 11:45 a.m. in the Norwegian capital.

DNB ASA, Norway’s largest lender, still expects a rate cut by Norges Bank in September, it said. “This is conditional on a stronger kroner in the months ahead, than in the weeks after the June monetary policy meeting,” Kjersti Haugland, an analyst at DNB in Oslo, said in an e-mail.

Norway’s headline inflation rate was 2.1 percent in the year and consumer prices fell 0.4 percent in the month.