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COST OF LIVING

Analysts predict summer of sharp food price rises in Norway 

Grocery bills for families in Norway have risen by around 15 percent in the past year, according to recent research. Price hikes on food and beverages are expected to continue throughout the summer. 

Published: 22 May 2023 16:06 CEST
Pictured are cabbages.
This summer could see sharp food price rises in Norway. Pictured are cabbages . Photo by Arnaldo Aldana on Unsplash

The price of the most important food and drink products has increased more than twice as much as general inflation, according to Sifo, an institute for consumer research. 

“We see a significant price increase for consumer goods. The cost increase in the reference budget for “food and drink” for the family, for example, is 15 percent from February 2022 to February 2023,” researcher Marthe Hårvik Austgulen told public broadcaster NRK. 

The research measured the cost of the average shopping bill for a well-balanced diet with essential everyday products in Norway. 

Meanwhile, figures from the national data agency show that the cost of food and non-alcoholic drinks has grown by over eight percent in the past year. 

The rise is expected to continue throughout the summer, Norwegian newswire NTB reports. 

A researcher at Oslo Met, Alexander Schjøll, told NTB that supermarkets have kept food price rises in Norway artificially low. 

“I absolutely believe in a sharp price increase in July. It may sound strange, but the price increase has been artificially low, especially now in May. The grocery chains have held back, and now they have to try to adjust,” the researcher said. 

In February, supermarkets locked into a price war and froze the cost of more than a hundred everyday products, meaning food prices didn’t increase as much as earlier predicted. 

Food researcher Ivar Pettersen in Alo Analysis told NTB that there would be a more moderate price increase in June, followed by a larger one in July. In July, the cost of food could increase by as much as five percent. 

“We must expect that on August 10th, we will receive data for July, which shows a fairly high price increase. It can actually rise to over 5 percent in one month. So, historically speaking, it is not unlikely,” Petterson said. 

Increased food prices have been triggered by high energy prices, the war in Ukraine and general inflation. Recently, the international market has seen a sharp fall in the price of basic foodstuffs, such as grain. According to Pettersen, this should help slow down increases in the medium term.

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ECONOMY

What lower inflation in Norway means for you 

Inflation in Norway continues to slow. However, the cost of living in the country isn’t slowing as quickly as economists expected. Here’s what that means to you. 

Published: 10 May 2024 11:44 CEST
What lower inflation in Norway means for you 

Inflation is slowing 

Norway’s Consumer Price Index, CPI, which measures changes in prices for household goods and services, has slowed yet again. 

Between April last year and the same month this year, prices in Norway rose by 3.6 percent. It marks the third time that price increases have been below four percent since the start of 2022. 

The figures, released by Norway’s national data agency Statistics Norway, mark the fourth month in a row where the 12 monthly inflation figure has been lower than the yearly figure from the month before. This means prices are rising less rapidly than before. 

“Price growth decreased for the fourth month in a row in April. Prices are still higher than they were at the same time last year for most goods and services, but they are generally rising more slowly than before,” Espen Kristiansen at Statistics Norway said. 

Food remains one of the biggest contributors to inflation 

The price of food and non-alcoholic beverages rose by 3.3 percent from March to April, according to Statistics Norway. 

Chocolate, soft drinks, coffee, and citrus foods saw the biggest price increases, which the national data agency called “unusual.” 

What wasn’t unusual, however, was the cost of food rising following Easter, when many supermarkets ran offers to compete for customers. 

“The rise must be seen in the context of the fact that large offer campaigns in connection with Easter dampened prices in March,” Kristiansen said. 

The figures for April show that food prices in Norway have increased by 6.8 percent compared to a year ago. 

The rising cost of food and drink in Norway could potentially outgrow wages this year, even if expected pay bumps will outpace forecasted inflation overall. 

Economists expected inflation to fall more 

Inflation hasn’t eased as much as some experts were expecting. Core inflation, which excludes energy prices and taxes, was measured at 4.4 percent year on year in April. This is above what economists surveyed by the newswire Reuters expected. 

Norges Bank, the country’s central bank, raised the policy rate to a 16-year high of 4.5 percent in December. The bank has said that inflation should generally be around two percent, so it has used interest rates to curb price increases. 

As inflation isn’t falling much quicker than expected, economists predict that the central bank may wait until December before slashing rates – which for consumers means that loan and mortgage repayments will remain high for the foreseeable future. 

“The fall in inflation has not been much greater than Norges Bank has thought. This, therefore, indicates that an interest rate cut may come in December instead of September,” Kjersti Haugland, chief economist at DNB Markets, told public broadcaster NRK. 

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