CPI up 1.4 per cent last 12 months

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The Consumer Price Index (CPI) rose by 0.2 per cent from May 2020 to June 2020, while the CPI-ATE growth was 0.4 per cent in the same period. From June 2019 to June 2020 the CPI rose by 1.4 per cent, while the CPI-ATE increased by 3.1 per cent.

Written by: Camilla Rochlenge

Actions taken by the Government to limit the corona virus outbreak have implications for the CPI also in June. Services with close to zero consumption in June accounts for about 3.5 per cent of total CPI measured in terms of the CPI weights. Almost 1.5 per cent had their prices estimated by the price development in the CPI-all-item index from May to June while approximately 2 per cent was estimated based on seasonal factors.

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

CPI CPI-ATE
June 2018 2.6 1.1
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
March 019 2.9 2.7
April 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
March 2020 0.7 2.1
April 2020 0.8 2.8
May 2020 1.3 3
June 2020 1.4 3.1

Price increase in June

The overall CPI rose by 0.2 per cent from May to June 2020. The rise was mainly caused by an increase in airfare of 18.7 per cent, largely due to the estimated prices of international passenger transport by air. Higher prices on petrol and auto diesel, clothes, household textiles and cars also contributed to the measured overall rise in June.

Prices on electricity and groceries pulled the CPI in the opposite direction. Electricity prices continued to fall in June, altogether prices on electricity including grid rent fell 8.3 per cent from May to June. Prices on food and non-alcoholic beverages fell by 0.8 per cent from May to June. Especially imported agricultural products showed price decrease in June, after several months of rising prices.

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

May 2020 - June 2020 May 2019 - June 2019
Miscellaneous goods and services 0.1 0
Restaurants and hotels 0.2 0.4
Education 0 0
Recreation and culture 0.4 0
Communications -0.3 0.2
Transport 2.3 1.5
Health 0.2 0
Furnishings, household equipment and routine maintenance 1 0
Housing, water, electricity, gas and other fuels -0.9 -1
Clothing and footwear 1.1 -1.3
Alcoholic beverages and tobacco -0.3 0.1
Food and non-alcoholic beverages -0.8 0.8
CPI -ATE All-item index 0.4 0.4
CPI All-item index 0.2 0.1

Increased prices for food last twelve months

The overall CPI rose by 1.4 per cent from June 2019 to June 2020. Prices on food contributed most with price increases of 3.5 per cent in this period. Imputed rentals, increased prices on restaurant and cultural services together with cars also contributed to the rise in the CPI.

The increase in the overall CPI was dampened by energy products, which among others consists of prices for electricity and fuel. Energy products collectively showed a 33.5 per cent price fall from June 2019 to June 2020. Electricity prices isolated dampened the CPI as the CPI excluding electricity CPI-AEL rose 2.7 per cent in this period.

Increase in the year-to-year growth

The year-to-year growth rose from 1.3 per cent in May to 1.4 per cent in June. The increase in the year-to-year growth was mainly caused by clothing prices which rose by 1.3 per cent from May to June this year, while falling 1.7 per cent in the same period in 2019. Prices on fuels and lubricants rose by 3.1 per cent from May to June in 2020, while falling 0.6 per cent in the corresponding period last year.

The rise in the year-to-year growth was dampened by price fall on food and non-alcoholic beverages from May to June this year, while increased prices was registered from May to June 2019.

The year-to-year growth in the CPI-ATE was 3.1 per cent in June 2020, an increase of 0.1 percentage points from May 2020.

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

June 2019 - June 2020
Miscellaneous goods and services 3.7
Restaurants and hotels 1.4
Education 3.5
Recreation and culture 3.3
Communications 4.4
Transport 2.6
Health 3.5
Furnishings, household equipment and routine maintenance 7.1
Housing, water, electricity, gas and other fuels -3.9
Clothing and footwear -0.8
Alcoholic beverages and tobacco 2.6
Food and non-alcoholic beverages 3
CPI -ATE All-item index 3.1
CPI All-item index 1.4

Corona consequences for CPI for June

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

Temporarily change in the reduced VAT rate

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 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, while for the services that consumption has been taken place a reduced VAT 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 May figures 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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