Consumer price index, July 2016

The year-to-year CPI-ATE growth was 3.7 per cent in July, up 0.7 percentage points from June. The CPI was 146.1 (1998=100) in July 2016, compared to 139.9 in July 2015, which corresponds to a year-to-year growth of 4.4 per cent. The increased growth rate in CPI-ATE from 3.0 per cent in June to 3.7 per cent in July is largely explained by a different price development for airfares, food and clothing from June to July this year compared to the same period last year.

The relatively high year-to-year growth rates we have seen in the CPI in recent months are strongly influenced by the price development for electricity and imported consumer goods during 2015 and 2016.

Monthly change: higher prices on food

From June to July, the CPI rose 0.6 per cent. The CPI has had a positive monthly change every month to date in 2016.

The main reason for the CPI rise was a solid increase in the prices of food, July being the fourth consecutive month with increased prices. Food prices traditionally increase considerably from June to July, and this year they rose 3.1 per cent. Meat prices went up 3.2 per cent, thus contributing the most. Fish and seafood was the group with the largest price increase, where prices went up 5.9 per cent. All sub-groups experienced price increases above 2 per cent. In total, the prices of imported agricultural goods rose 3.3 per cent from June to July, while in comparison, prices of Norwegian agricultural goods rose 1.9 per cent in the same period. Prices of non-alcoholic beverages rose 2.1 per cent from June to July.

1 July is an important date for price changes in the foodstuff business, as this is one of two dates per year where the suppliers can adjust their pricing. Several important suppliers have announced that they have increased their prices. Similarly, food chains have communicated fewer sales campaigns during the summer holiday period. 1 July is also the date for price changes negotiated in the Agricultural agreement to come into effect. However this year’s agreed price increases were lower than previous years, and are therefore contributing to the increased food prices to a lesser extent.

Prices of transportation increased 4.9 per cent from June to July. Airfares went up 11.1 per cent, mainly due to higher prices on international flights. Taxi prices are measured twice a year, and their increase also contributed to the higher transportation prices.

The individual share paid for health services went up from 1 July and was the main factor behind the increase of 2.6 per cent in the sub-index of out-patient services last month.

The monthly change in the CPI was mainly dampened by lower prices on clothing and accommodation services.

Year-to-year growth: higher electricity prices, lower fuel prices

From June 2015 to June 2016, the CPI grew 4.4 per cent. Higher electricity prices were the largest contributor to the year-to-year growth; prices on electricity including grid rent showed a year-to-year increase of 38.7 per cent. The electricity prices have more than doubled since their historically low level during the summer of 2015. The grid rent has also risen considerably more than the general increase in the CPI during the last twelve months.

Prices on Norwegian consumer goods increased 7.0 per cent year-over-year, mainly caused by the rising electricity prices. Imported consumer goods rose 4.3 per cent last year. The CPI excluding electricity (CPI-AEL) rose 3.5 per cent from July 2015 to July 2016.

Airfares, clothing, furniture and recreational and cultural services were other important groups with year-to-year price increases.

The year-to-year growth of the CPI was mainly dampened by lower fuel prices. In July this year petrol prices were 7.0 per cent lower than the same month last year.

Change in the year-to-year growth: CPI growth rate jumped

The year-to-year growth in the CPI rose from 3.7 per cent in June to 4.4 per cent in July. This is the highest year-to-year growth since October 2008. The increased growth rate in the CPI can partly be explained by the development in airfares. These rose more than 11 per cent from June to July 2016, but fell around 6 per cent in the same period in 2015. The price development of electricity and food also pulled the growth rate up. Petrol prices pulled in the opposite direction with a decrease of 1 per cent from June to July this year, compared to a 1.6 per cent increase last year.