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Norway prices in biggest jump since 2008

Consumer prices in Norway have risen 5.1 percent since last November, the highest increase for 13 years.

Published: 10 December 2021 13:12 CET

Pictured is a model house.

The price consumers pay for goods and services has risen by more than 5 percent over the past 12 months. Pictured is a miniature house. Photo by Tierra Mallorca on Unsplash

Norway’s consumer price index has risen by 5.1 percent from November last year to the same month this year. This is the highest twelve-month growth in prices since October 2008, according to figures from Statistics Norway.

The consumer price index (CPI) is a way of measuring the cost of goods and services, such as food and utilities, over a period of time expressed as a percentage.

Rental prices, electricity, food, clothes and the cost of a trip to the hairdressers are examples of things measured by the CPI.

One of the main driving factors in the rise is soaring energy prices in Norway.

“We must go 13 years back in time to October 2008 to find a corresponding twelve-month growth in the CPI. Not surprisingly, high electricity prices contribute to the upswing,” Trym Kristian Økland from Statistics Norway explained.

Since November 2020, electricity prices, including grid rent, have risen by 123.5 percent, meaning energy costs contributed to 3.3 percent of the more than five percent growth in the CPI.

In addition to the energy prices, the cost of fuel, hotels, and hospitality were also responsible for the rising CPI.

READ MORE: Five things that are becoming more expensive in Norway (and why)

However, there is some good news for households as the price of food and non-alcoholic drinks pulled in the opposite direction, trending downwards by 3.6 percent.

The reason for food prices falling was the removal of the sugar tax, Økland said.

Core inflation, which is adjusted to exclude the cost of food and energy, rose by 1.3 percent. This exceeded the expectations of Norway’s central bank, Norges Bank, which expected a core inflation figure of 1.1 percent.

Additionally, core inflation exceeding estimates is usually an indicator for financial institutions that interest rates should be raised. Throughout the autumn and winter, Norges Bank has said that it is planning to raise interest rates by 0.25 percent in December, making loans and mortgages pricier for households.

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EXPLAINED: How wealthy is the 'average' Norwegian?

High salaries go hand in hand with the high cost of living in conversations about Norway.

However, other factors, such as high homeownership rates, indicate that there is plenty of disposable income for locals to save and invest in their futures.

Previous studies have also suggested that Norwegians are the seventh wealthiest nationals in the world.

Norway’s national data agency, Statistics Norway, has compiled its own set of figures indicating that the average Norwegian household has a net wealth of around 3.8 million kroner.

Net wealth accounts for everything a person owns, including property, stocks, or cash, minus any debts or liabilities.

The vast majority of this wealth was derived from the estimated value of property. This alone gives the average Norwegian an estimated wealth of 3.74 million kroner.

READ ALSO: How much does an apartment in Norway cost?

The value of second homes was included, which skewed things as only around 10 percent of households owned a secondary residence.

The average price of a home in Norway was 4.5 million kroner in March of this year, and house prices have increased substantially in recent years.

Savings, cash, stocks and other capital accounted for 1.72 million kroner, giving Norwegians an average wealth of 5.46 million kroner. Average debts of 1.68 million kroner gave Norwegians an average net wealth of 3.8 million kroner.

The figures from Statistics Norway were obtained using figures from tax returns for 2022, which were submitted in 2023.

Those aged between 67 and 79 years old were the wealthiest generation in Norway on average. This is partly because they have more capital than most other groups and more expensive property.

However, the most significant factor is the lower levels of debt. They had half the debt of the next richest group, those aged between 55 and 69.

Younger age groups weren’t as wealthier as they had much higher debts and lower capital.

Still, Norway’s wealthiest individuals significantly boosted the average. When using the median, the average Norwegian household had a net wealth of just under 2 million kroner.

When the median was applied to capital, the figure was 339,300 kroner compared to the average of 1.76 million kroner.

The large difference in capital was attributed to Norway’s wealthiest individuals significantly pulling up the average.

“This is mainly due to large fortunes in shares and securities, where a few own very much. Shares and other securities and share savings accounts are assets with a median value equal to zero, which indicates that these are not important asset items for most households,” the report said.

Money kept in the bank was still important for most residents of Norway, though. The median value of bank deposits in Norway was 215,000 kroner, compared to the average of 600,000.

The gulf between the average value of property owned and the median was roughly 500,000, with the median being 3.25 million kroner.

Furthermore, Norway’s median debt level was around 860,000 kroner compared to the average of 1.67 million kroner. Around 85 percent of Norwegian households were in some form of debt.

Significant differences also exist between Norway’s wealthiest and poorest residents. Residents belonging to the country’s poorest ten percent had an average net wealth of almost minus 1 million kroner.

Meanwhile, Norway’s wealthiest ten percent had a net wealth of 19 million kroner. The top 50 percent also owned considerably more than the bottom 50 percent.

“Despite the former comprising 1.27 million households, while the latter comprises approximately 25,000 households, the bottom 50 percent own only 4 percent of the total net worth, while the top 1 percent owned as much as 22.3 percent in 2022,” the report read.

There was also significant variation in wealth depending on household type. For example, a single mother or father with a child aged between 6 and 17 had a net wealth of 2.24 million kroner, compared to a couple with children of the same age with an average net wealth of 5.12 million kroner.

Typically, households with more than one person had more money as more than one wage earner likely lived at the address.

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