Norway is well known for its high prices. National stats agency Statistics Norway (SSB) recently reported that the price level in the country in 2020 was 39 percent above the European average, making Norway the third most expensive country in Europe.
To top that off, the SSB stated that Norway was the most expensive country for alcohol and tobacco in Europe in 2020, with the prices of alcohol and tobacco a whopping 120 percent above the European average, and the most expensive country when it comes to food and non-alcoholic beverage in the Nordics.
So, it is no surprise that residents in Norway are increasingly frustrated and worried due to the recent increase in prices – especially as there are no signs that the across-the-board price rises are likely to reverse course anytime soon.
What awaits consumers in the future, and what can people do to reduce the negative effects of the ongoing energy and price crisis on their personal finances?
Inflation to remain high in the months ahead
Dane Cekov, an analyst at Nordea who also has experience working for Norway's Central Bank (Norges Bank), told The Local that inflation would remain high in the months ahead.
"Inflation will definitely be very high, as the energy prices are high. It will be higher than the two percent target of Norges Bank in the months to come. However, it will start to subside throughout the rest of the year – that is, if the energy prices don't skyrocket.
"My expectation is for inflation to remain at about five percent. Overall, to be precise, when it comes to this year as a whole – I expect the average to be at 4.5 percent. Next year, I think it will fall toward three percent," Cekov told The Local.
The Nordea analyst also explained why Norges Bank's raised the key interest rate from 0.75 percent to 1.25 percent.
"The rate is going up because inflation is growing, the Norwegian economy is strong, and we have a very low level of unemployment, one of the lowest levels since 2008.
"The activity in the economy is very high, companies are struggling to find labour and are competing for workers, so wages are rising, and there's high inflation down the road… That's why Norges Bank is increasing the rate – it's a thermometer; when inflation is high, the rate needs to go up," Cekov said.
Six expert tips for cutting costs
Thea Olsen, a consumer economist at Danske Bank, shared six valuable tips with The Local with a view to helping consumers navigate the months ahead.
Olsen believes that these saving tips can help people manage personal finances as prices increase:
1. Set up a budget
A good way to prepare for increased expenses is to set up a budget. If you already have a budget, you should update it with current rates.
It is important to take into account that there will be more interest rate increases in the future and that the prices of food, electricity and fuel will be at a higher level than what you are commonly used to.
Understanding how mortgage rates affect your finances is important, as is updating your budget.
READ MORE: What do workers in Norway spend their salaries on?
2. Re-negotiate mortgage rates
Find out how the interest rate increase can affect your finances and review the conditions you have in your bank. Find out if you have competitive terms.
Compare your mortgage rate with the interest rate you could get in other banks. Negotiating mortgage rates could lead to saving several thousand kroner a month – if you can negotiate the rate down.
As an example, even if your mortgage is just 0.25 percent lower after negotiating you'll save 2,500 kroner annually for each million you owe.
3. Be careful when it comes to fuel prices
Fuel costs money. If you learn to keep an eye on the prices more often, you can save several thousand kroner a year just by doing this. The prices might differ by three-four kroner.
4. Save money on your food budget
Many people spend more money than necessary on food and drink. However, you can easily save money on your food bill with a few simple steps. By setting up weekly menus, shopping once a week, and avoiding small transactions, most people have the opportunity to trim their food expenditure.
READ ALSO: Five essential tips for saving money on food shopping in Norway
5. Cut gym expenses
Do you have the opportunity to work out in alternative ways? Once a year, you should review how often you actually use the gym.
Does it justify the price you are actually paying? Are there alternative exercise methods that are just as good for you but better for your wallet? If that's the case – cancel your membership.
6. Go through your subscriptions
Are you paying for streaming services you aren't using? Do you need a subscription to both Netflix and HBO?
According to the Norwegian Media Barometer survey, more than 70% of the population in Norway is subscribed to one or more paid streaming services.
The cost of streaming services can vary greatly. Some subscriptions do not necessarily cost a fortune, but we know that many people have multiple subscriptions and that this "cocktail" of subscriptions can become expensive over time.
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