Electricity prices rose by over 30 percent over the past year, but inflation is slowing down. Tax increases gave unusually low rise in prices for food and beverages in January.
It is primarily the high prices of electricity, including grid rent that contributed to the consumer price index rising by 3.1 per cent in the past year, according to recent figures from Statistics Norway (Statistics Norway) . According to Bloomberg, however, inflation was expected to be 3.3 per cent in advance, writes Dagens Næringsliv .
In January, prices for electricity, including grid rent, were 30.4 per cent higher than at the same time last year, according to Statistics Norway’s figures. Electricity prices increased by 3.7 per cent from December to January, thus helping to curb the decline in the consumer price index of 0.5 per cent in January.
– January sales in particular clothing, but also footwear, contributed most to the decline in the consumer price index (CPI), and prices of clothing fell 12.3 per cent from December to January, says adviser Kristian H. Myklatun in Statistics Norway.
Also, the prices of furniture fell significantly in the first month of the year.
– Unusually weak price inflation
Core inflation – consumer price index adjusted for tax changes and excluding energy products (CPI-JEA) – fell by 0.7 per cent in the last month. From January last year to January this year, it has increased by 2.1 per cent, but also lower than what analysts had expected. Core inflation is an important factor for interest rate fixing from Norges Bank.
Looking at the twelve-month growth, this was a fall of 0.4 percentage points from December 2018 to January 2019. The decline is primarily due to weak price increases for food and non-alcoholic beverages. Prices of these commodity groups increased by 0.4 per cent, compared with 2.6 per cent in the same period last year. In one year, the price increase for these goods has been low 1.2 per cent.
– The price increase in January 2019 was unusually weak. It is common for food prices to go up somewhat in January, but the increase in January 2019 was lower than normal, states Ingvill Størksen, director of Virke grocery.
She points out that food prices fluctuate according to a fixed pattern throughout the year, and that prices usually go down in typical offer periods such as Christmas, Easter and before school start, but that they adjust again afterwards. Størksen believes that the weak rise in prices in January is due to fierce competition between the chains and what she calls a dramatic increase in taxes on chocolate and sugar confectionery, as well as on non-alcoholic beverages.
From January 2018, the tax level on chocolate and confectionery increased by 83 per cent, while the tax on non-alcoholic beverages increased by 42.3 per cent. In the state budget for 2019, the tax increase for chocolate and sugar confectionery was reversed, while it was maintained for soft drinks and non-alcoholic beverages.
Statistics Norway is also aware that the fees have a lot to say for the weak price trend for food and non-alcoholic beverages in January.
– This must be seen in the context of changes in fees from the New Year, both this year and last year. Last year, there was an increase in the chocolate and confectionery tax as well as in the tax on non-alcoholic beverages, whereas this year there was a reduction in the chocolate and sugar confectionery tax from the New Year, Myklatun says.