Inflation
The Government has set an inflation target for the monetary policy in Norway. The operational target of monetary policy is low and stable inflation, with annual consumer price inflation of approximately 2.5 per cent over time.
Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. In general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances are not taken into account.
In real time it will always be difficult to determine which price movements are permanent and those which only have short-term effects on the CPI. There is no one indicator that provides a precise picture of underlying inflationary pressures in all situations. Different measures of underlying inflation are discussed in the Monetary Policy Report.
Blue line = CPI-ATE Red line = CPI Broken line = projections
Chart in PowerPoint (19 kB)
(Save the file, open it in PowerPoint, and then double-click on individual charts in order to gain access to the underlying data)
Chart updated: 31 October 2007
The chart above shows inflation over the past two years in per cent and the projection for the period ahead from the last Monetary Policy Report. Inflation is measured as the year-on-year rise in the CPI and CPI-ATE (1). The continuous lines illustrate the actual development in the inflation, while the broken lines illustrate Norges Bank’s projections. Data for the CPI-ATE and projections can be downloaded from charts in PowerPoint published in connection with the Monetary Policy Report.
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank