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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.

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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MONEY

EXPLAINED: What the revised national budget in Norway means for foreigners 

The Norwegian government has presented its revised budget for 2022. Here's The Local's roundup of some of the key proposals and what they mean for your wallet.

EXPLAINED: What the revised national budget in Norway means for foreigners 

Electric cars to become more expensive

The government will replace the VAT exemption for electric cars with a subsidy scheme. This means that electric cars that cost over 500,000 kroner will be subject to VAT, while EVs that cost less will be exempt from VAT. 

The government has said the cost of buying an EV with a sticker price of 600,000 would become 25,000 kroner more expensive. 

An EV costing more than a million kroner will become 125,000 kroner pricier, according to the government’s proposals. 

“If you can afford to buy a car for 1.7 million, it is only fair and reasonable that you also pay VAT,” Finance Minister Trygve Slagsvold Vedum said of the announcement

The scheme will come into effect next year. 

Free ferry tickets

All ferry journeys on routes with less than 100,00 passengers will be free from July 1st. This is likely to make around 30 of Norway’s 130 connections completely free of charge. 

The free trips will apply to local residents, tourists and other travellers. 

READ MORE: Why some ferry routes in Norway will be completely free this summer

It’ll become easier to get a better deal on energy prices 

The government will offer five million kroner in funding to help improve the Consumer Council’s electricity price comparison site strømpris.no.

The funding will make the comparison site better so that both spot price and fixed price customers can get the best energy deal available and save money. 

The government expects high electricity prices to continue

The government has written in its revised national budget that it expects high energy prices to continue. 

Tax revenues from the power companies will be used to cover the expenses of the electricity subsidy scheme, which sees the government pick up 80 percent of energy bills when the spot prices rise above a certain amount. 

Experts: Loan and mortgage repayments to increase faster

Loan and mortgage repayments could go up more quickly than anticipated due to increased oil spending, business and financial site E24 reports. 

In the revised budget, the government has said that it plans on spending 30 billion more of revenue from the oil fund than previously expected. 

“I think this is a somewhat more expansive use of money than Norges Bank (Norway’s central bank) had envisioned, and in that sense, I think that in isolation, it could contribute to a higher interest rate path, not strongly, but somewhat higher,” Kjersti Haugland, chief economist at DNB, told E24. 

If Norges Bank raises the key policy rate, lenders will follow suit meaning the loan or mortgage becomes more expensive to repay. 

Counties will be split up to improve local services

Viken will be divided into Akerhus, Buskerud and Østfold. Vestfold og Telemark will be split into two, as will Troms og Finnamrk. 

If parliament can make a final decision before the summer, the division will take place from January 1st 2024. 

The government wants to split the counties to improve the availability of local services in these areas, according to a press release from the Ministry of Local Government

Air passenger tax scrapped for the rest of the year

The air passenger tax, which was shelved for the last few years, will also be frozen until the end of the year. 

Cut in support for public transport

The government will be cutting its support scheme for public transport firms hit by a loss of income related to the pandemic from July 1st. 

For consumers, this means that some firms will cut the routes they offer due to the funding ending. 

Ruter has said that it is already cutting the number of routes from July 4th as passenger numbers are not back to pre-pandemic levels.Routes could also be cut in Oslo and Viken

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