Food prices could become a joke in interest rates – NRK Norway – An overview of news from different parts of the country

Price inflation fell sharply in the July-August period. Now analysts are wondering ahead of the release of new inflation figures from Statistics Norway on September 11.

– Food prices can become a clown. There is an unusually high amount of uncertainty, says chief economist Kjersti Hoogland at DNB Markets.

Because if food prices develop in August in the same way as they have done so far this year, there could be another jump in inflation, according to Statistics Norway.

The reason is that if food prices go up, that can lead to an increase in inflation, which in turn can have an impact on the level of interest rates. For example, it takes longer before the interest rate is lowered.

More on that below.

Outside the Extra store on Majorstua in Oslo, student Tim, who comes from Vågå in Gudbrandsdalen, noticed that shopping had become more expensive.

– I live in a nice group where we share most things. But I think single people who live alone have noticed that the package of minced meat has become more expensive, he says.

From the new year until this summer, consumer prices rose monthly by about three times the central bank’s target of 2 percent price growth annually.

– I saw it on receipts after I shopped, and I thought, Oh, this was cheaper the last time I thought about the price, he says.

– A very significant impact on price growth

During the month of July, price inflation fell by one full percentage point. The question now is whether this trend will continue. If so, it’s good news for those hoping that the central bank will soon run out of aggressive interest rate medicine.

– It will be very interesting to continue. “Food accounts for a large proportion of the CPI, so it has a very big impact on price growth in general,” says Kjersti Hoagland, chief economist at DNB Markets.

It expects Norges Bank to raise interest rates for the last time in September.

Nordea also expects that he will now do another rate hike in September. to Finansavisen Low electricity prices, a price war on electric cars, and weak consumption figures are leading to lower inflation, says chief strategist Dane Sykov.

But the big question is what will happen to the evolution of grocery prices this fall.

So far this year, grocery chains have broken away from a more than ten-year practice of changing prices mainly only twice a year. Food chain Rima said this summer that the food chain is moving away from the practice.

Central Bank Governor Ida Waldenbach is now paying very close attention.

Food prices have gone up a lot in the past year. Previously, these price changes occurred twice a year, in February and July. Now it is distributed more evenly. The central bank governor says this gives some uncertainty about the month-to-month trajectory of food prices.

It says Norges Bank expects the rise in food prices to gradually decrease.

This quote is from an interview that NRK gave to Walden Bache in connection with the publication of the latest interest rate change on August 17th.

The central bank does not conduct interviews after work begins on the next interest rate decision, which is usually 2-3 weeks before the interest rate meetings.

Uncertain growth in prices in August

Usually, consumer prices fall during the month of August.

But if food prices follow the same trend as they have so far this year, it is not certain that they will now, says Espen Christiansen, head of the consumer price index at Statistics Norway. The question then becomes what this means for future interest rate developments.

– Food prices have risen steadily every month. If it also happened in August, meaning prices rose from July to August, you’d get an increase in inflation measured by the 12-month CPI, says Espen Christiansen.