Norway’s December core inflation lower than expected

OSLO (Reuters) – Norway’s core inflation rate eased more than expected in December, Statistics Norway (SSB) data showed on Friday, supporting forecasts that interest rates will begin to decline this year.

Core inflation, which strips out changing energy prices and taxes, stood at 2.7% year on year, down from 3.0% in November and below the 2.8% expected by analysts in a Reuters poll.

Norges Bank had expected core inflation of 2.8%.

Norges Bank in December kept interest rates on hold at a 16-year high of 4.50% and said it planned to cut rates three times in 2025, down from four cuts seen previously, with the first easing expected in March.

The central bank, which targets core inflation of 2.0%, said at the time that it expected the policy rate to decline to 3.75% by the end of 2025, in a blow to global monetary easing hopes.

Norges Bank is scheduled to make its next policy rate announcement on Jan. 23.

The price of food and non-alcoholic beverages rose by 4.0% year-on-year, making it a significant contribution to inflation, the SSB data showed.

Headline inflation, which includes changes in energy costs and taxes, eased in December to 2.2% from 2.4% in November, while analysts in the Reuters poll had expected a reading of 2.5%.