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UPDATE 1-Clothing prices push up Norwegian inflation
December 10, 2012 / 9:43 AM / 5 years ago

UPDATE 1-Clothing prices push up Norwegian inflation

OSLO, Dec 10 (Reuters) - Higher prices for clothing pushed
core Norwegian inflation slightly higher in November but not
enough to prompt interest rate rises from the central bank to be
brought forward.
    Core inflation was an annual 1.3 percent in November, in
line with analysts' mean forecast in a Reuters poll. It was up
from 1.1 percent in October's reading.
    Headline inflation meanwhile came to an annualised 1.1
percent, the same pace as in October but below expectations for
1.2 percent. Producer prices were unchanged in November compared
to a year ago.
    Stubbornly low price rises have been the central bank's
biggest worry recently with forecasts showing core inflation
likely to stay below the bank's 2.5 percent target for some
    Analysts said the November reading would not change current
central bank policy. The Norwegian crown was stable against the
euro after the numbers were released.
    "The underlying trend is quite stable and I think it's well
in line with what the central bank also envisions at the moment.
Therefore it won't mean much (for monetary policy)," said Kyrre
Aamdal, senior economist at DNB Markets. 
    "We'll have to look about a year ahead (before rates go up),
We predict October next year," he added.
    The central bank would be keen to raise rates to push
borrowing costs higher and cool the real estate market, but any
increase risks firming an already strong crown currency and
hurting exporters, and reducing inflation further.
    Norges Bank currently expects to raise its 1.5 percent
benchmark rate sometime between next March and August as a
booming oil sector and large public sector keep Norway one of
the fastest growing economies in Europe. 
    The central bank announces its next rate decision on Dec.

 (Reporting by Victoria Klesty. Editing by Jeremy Gaunt.)

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