Consumer prices take a dive

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Prices may seem higher at the grocery store, and high in Norway in general, but Norway’s state statistics bureau SSB reports that the country’s consumer price index (CPI) fell sharply in July. That lowers the inflation rate, just before central bank governors gather to evaluate interest rate levels.

The closely watched CPI rose by 2.2 percent in July, to 125.7 from 123 in July of last year. The rate of growth was down sharply from the 3.4 percent recorded in June.

When adjusted for changes in taxes and public fees and removing energy rates, the CPI was up 2.5 percent in July, compared to 3.3 percent in June.

SSB researchers pointed to lower prices for clothing and shoes and lower airfares as the items contributing the most to the decline in the price rises. Airfares had gone up in June, but fell again in July, according to SSB, mostly to international destinations.

Fresh fruit and vegetable prices also declined in July, as did hotel room rates and fuel prices.

Prices that rose included those for various food products, soft drinks and electricity. Restaurants, cultural events and health care costs also rose.

Lower oil and other sorts of fuel prices contributed the most to the lower CPI in July, with gasoline prices down more than 10 percent.

Norway’s central bank (Norges Bank) will consider interest rate levels at a meeting on Wednesday, but most analysts aren’t expecting any change from today’s key lending rate of just 1.25 percent.

Interest rates remain at record low levels, and while some increase is expected by yearend, economics professor Kjetil Storesletten told newspaper Aftenposten Monday that he expects rates to remain low for the next decade.