Norway's PM warns that it will take time for inflation to come down
The sharp rise in prices in Norway may take a while to come down, PM Jonas Gahr Støre said in his summer speech while also pledging to keep unemployment low.
In the summer speech to summarise the opening half of 2023, the PM warned that the country would need to avoid making the same financial mistakes it did in the 80s.
"The problems were taken seriously too late," he said of the economic situation in the 80s. The decade in Norway was characterised by a period of high-interest rates and inflation.
"Many were unable to handle the mortgage and had to sell at a loss. There were many personal tragedies as a result of this. Those years were also very demanding politically," he added.
He said the main lesson to be learned from the 80s is how costly it is to bring down inflation if it is left to consolidate at a high level for too long.
Inflation in Norway is currently at 6.7 percent, according to the national data agency Statistics Norway.
Støre said that the government is focused on bringing down inflation but added that it would take time to do so.
"The task now is to avoid what happened at the end of the 80s happening again, avoid us having a downturn, avoid high unemployment and a high number of bankruptcies. But we must be prepared that it will take time to bring down the price increase. So, there is no quick solution here in Norway or in other countries," Jonas Gahr Støre said.
Norway's government aims to get through the current period of high inflation with one of the lowest unemployment rates in Europe. He added that high employment gave consumers better protection against rising interest rates. Norway's central bank has been raising interest rates to curb inflation.
READ MORE: Why Norway's central bank keeps raising interest rates
Although he did say that he understood consumers' frustration at high inflation in Norway and rising interest rates.
"That frustrates many; I can understand that. But there is no quick solution, neither in Norway nor in other countries. Much of the price increase is driven by imports. When there is a price rise outside, this comes to Norway," he said.
"If price inflation gets out of control, people won't receive interest rate letters in their inboxes; it will be termination letters," the PM added.
"We have to do that (avoid inflation getting out of control), and we must do everything we can to avoid it. So far, halfway through 2023, I have to say that things are going reasonably well," Støre said.
Comments
See Also
In the summer speech to summarise the opening half of 2023, the PM warned that the country would need to avoid making the same financial mistakes it did in the 80s.
"The problems were taken seriously too late," he said of the economic situation in the 80s. The decade in Norway was characterised by a period of high-interest rates and inflation.
"Many were unable to handle the mortgage and had to sell at a loss. There were many personal tragedies as a result of this. Those years were also very demanding politically," he added.
He said the main lesson to be learned from the 80s is how costly it is to bring down inflation if it is left to consolidate at a high level for too long.
Inflation in Norway is currently at 6.7 percent, according to the national data agency Statistics Norway.
Støre said that the government is focused on bringing down inflation but added that it would take time to do so.
"The task now is to avoid what happened at the end of the 80s happening again, avoid us having a downturn, avoid high unemployment and a high number of bankruptcies. But we must be prepared that it will take time to bring down the price increase. So, there is no quick solution here in Norway or in other countries," Jonas Gahr Støre said.
Norway's government aims to get through the current period of high inflation with one of the lowest unemployment rates in Europe. He added that high employment gave consumers better protection against rising interest rates. Norway's central bank has been raising interest rates to curb inflation.
READ MORE: Why Norway's central bank keeps raising interest rates
Although he did say that he understood consumers' frustration at high inflation in Norway and rising interest rates.
"That frustrates many; I can understand that. But there is no quick solution, neither in Norway nor in other countries. Much of the price increase is driven by imports. When there is a price rise outside, this comes to Norway," he said.
"If price inflation gets out of control, people won't receive interest rate letters in their inboxes; it will be termination letters," the PM added.
"We have to do that (avoid inflation getting out of control), and we must do everything we can to avoid it. So far, halfway through 2023, I have to say that things are going reasonably well," Støre said.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.