CPI up 1.3 per cent last 12 months

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The Consumer Price Index (CPI) rose by 0.7 per cent from June 2020 to July 2020, while the CPI-ATE growth was 0.9 per cent in the same period. From July 2019 to July 2020 the CPI rose by 1.3 per cent, while the CPI-ATE increased by 3.5 per cent.

Written by: Gunnar Larsson

Actions taken by the Government to limit the corona virus outbreak have implications for the CPI also in July. Even though most services are available again and is included as normal in the CPI, some services regarding travel amongst other are still being treated separately. Services with close to zero consumption in July accounts for about 2.5 per cent of total CPI measured in terms of the CPI weights, and prices on these services are mainly estimated based on seasonal factors.

Figure 1. 12-month rate, CPI and CPI-ATE

CPI CPI-ATE
July 2018 3 1.4
Aug. 2018 3.4 1.9
Sep. 2018 3.4 1.9
Oct. 2018 3.1 1.6
Nov. 2018 3.5 2.2
Dec. 2018 3.5 2.1
Jan. 2019 3.1 2.1
Feb. 2019 3 2.6
Mar. 2019 2.9 2.7
Apr. 2019 2.9 2.6
May 2019 2.5 2.3
June 2019 1.9 2.3
July 2019 1.9 2.2
Aug. 2019 1.6 2.1
Sep. 2019 1.5 2.2
Oct. 2019 1.8 2.2
Nov. 2019 1.6 2
Dec. 2019 1.4 1.8
Jan. 2020 1.8 2.9
Feb. 2020 0.9 2.1
Mar. 2020 0.7 2.1
Apr. 2020 0.8 2.8
May 2020 1.3 3
June 2020 1.4 3.1
July 2020 1.3 3.5

Price increase in July

The overall CPI rose by 0.7 per cent from June to July 2020. The rise was mainly caused by an increase in prices on food, which rose 3.7 per cent. It was higher prices on meat, as well as dairy and sweets and other sugary products, which contributed to the rise in the food prices. The prices for non-alcoholic beverages showed only a moderate increase in the period, which can be attributed by a relief in government taxes introduced in July.

The prices for transport services and fuels and lubricants for personal transport equipment also contributed to the rise in the overall CPI. The price increase for transport services was among others caused by the prices for international flights, which were estimated with a seasonal factor.

Prices on clothing and footwear pulled the CPI in the opposite direction. Clothing and footwear usually show a price decrease in July as a result of summer sales, and from June to July 2020 the prices fell 2.8 per cent. The price decrease on clothing was weaker this year compared to July previous years.

Figure 2. Monthly change in per cent. CPI, CPI-ATE, CPI by divisons

June 2020 - July 2020 June 2019 - July 2019
Miscellaneous goods and services 0.6 0.2
Restaurants and hotels 0.4 -0.3
Education 0 0
Recreation and culture 0.1 -0.1
Communications 0.5 -0.2
Transport 1.5 1.6
Health 0.4 0.4
Furnishings, household equipment and routine maintenance 1 0.6
Housing, water, electricity, gas and other fuels -0.1 0.4
Clothing and footwear -2.8 -5.5
Alcoholic beverages and tobacco 0.6 0.4
Food and non-alcoholic beverages 3.3 4.2
CPI -ATE All-item index 0.9 0.6
CPI All-item index 0.7 0.7

Increased food prices last twelve months

The overall CPI rose by 1.3 per cent from July 2019 to July 2020. Prices on food contributed the most with price increases of 2.7 per cent in this period. Higher prices on restaurant and cultural services also contributed to the rise in the CPI. Altogether prices on services rose by 2.7 per cent from July 2019 to July 2020. In addition, purchase of vehicles also contributed to the overall price growth, with a price increase of 2.8 per cent in the same period.

The increase in the overall CPI was dampened by the prices on electricity including grid rent, which showed a decrease of 35.1 per cent from July 2019 to July 2020.

Increased year-to-year growth in the CPI-ATE

The year-to-year growth in the CPI-ATE was 3.5 per cent in July 2020, an increase of 0.4 percentage points from June 2020. In addition to the price development on goods and services mentioned above, the year-to-year growth for the CPI-ATE is amongst other affected by tax reliefs on non-alcoholic beverages from July. The growth in the CPI-ATE is also affected by the temporary changes in tax rates related to the Corona pandemic.

The year-to-year growth in the CPI fell from 1.4 per cent in June to 1.3 per cent in July.

Figure 3. 12-month rate. CPI, CPI-ATE, CPI by divisions. July 2019 - July 2020

July 2019 - July 2020
Miscellaneous goods and services 4.2
Restaurants and hotels 2.1
Education 3.5
Recreation and culture 3.4
Communications 5.1
Transport 2.5
Health 3.5
Furnishings, household equipment and routine maintenance 7.5
Housing, water, electricity, gas and other fuels -4.4
Clothing and footwear 2.1
Alcoholic beverages and tobacco 2.9
Food and non-alcoholic beverages 2.2
CPI -ATE All-item index 3.5
CPI All-item index 1.3

Corona consequences for CPI for July.

Measures taken by the Government to limit the corona outbreak have implications for the CPI also for July. Services that were still closed or had a consumption close to zero, such as sports events were estimated with the change in the all-item CPI from June to July. Services with clear seasonal variation in prices such as international flights and package holidays had their price development estimated based on seasonal factors. For more information, see Corona consequences for CPI.

Temporarily change in the reduced VAT rate and air passenger tax.

As one of the measures related to the corona situation, the reduced value added tax (VAT) rate was decreased from 12 per cent to 6 per cent from April 1, 2020. Reduced VAT rates apply to personal transports, hotel accommodations as well as access to cinema, sporting events and amusement parks. In addition, air passenger tax is temporarily exempt. In CPI-AT and CPI-ATE, this is treated so that the services related to non-availability due to the corona situation are not affected by the changed VAT rate nor flight passenger tax, while for the services that consumption has been taken place a reduced VAT and air passenger tax has been measured.

Seasonally adjusted all-item CPI and all-item CPI-ATE.

Statistics Norway publishes each month a seasonally adjusted all-item CPI and all-item CPI-ATE. The seasonal adjustment during the corona crisis is made in a way that the figures from the period which is affected by the crisis are not included in the data for calculating the seasonal pattern. Technically, in the seasonal adjustment routine, this is done by specifying the period as the extreme value. Statistics Norway's seasonal adjustment of all-item CPI and all-item CPI-ATE is in line with recommendations from Eurostat.

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