OSLO, Feb 20 (Reuters) – Norwegian headline inflation is forecast to fall to 4.8% in 2023 from 5.8% last year, when it was at its highest since the 1980s, a publicly appointed commission said on Monday.
With members from labour unions, employers’ federations and Statistics Norway, the commission’s conclusions will influence the outcome of Norway’s annual round of collective bargaining.
Workers’ pay can influence future inflation and is closely monitored by the Norwegian central bank when interest rates are set.
Core inflation, which excludes changes in taxes and energy prices, is expected to be 5.1% this year, above the central bank’s long-term target of 2.0%, the wage commission predicted.
Norway’s core inflation rate jumped to 6.4% in January, its highest level on record, exceeding the central bank’s 5.9% expectation.
On Thursday, the central bank’s chief vowed to bring down inflation, saying there “should never be any doubt” that the bank’s job was to “ensure low and stable inflation”.
Overall, wages in manufacturing industries rose by 4.0% last year, with factory workers earning a rise of 3.5% while office staff in the same companies received an increase of 5.0%, the commission said.
Bargains struck last year, a key measure in the upcoming bargaining, will add 1.3% to manufacturing wages in 2023, the commission said.
While the commission’s forecast for headline inflation is in line with the central bank’s forecast from December, the overall implication is for wages to grow about 5%, said Kyrre Aamdal, a senior economist at DNB Markets.
“This is a bit higher than both we and Norges Bank have forecast,” he said.
“DNB has forecast rate hikes at the coming three central bank meetings, and we think that today’s report support that rate view.”
The central bank said in January it aimed to raise its key interest rate from 2.75% in March.
