Six things in Norway made more expensive by the weak Norwegian krone
The weak Norwegian krone has greatly impacted the cost of living in Norway over the past year, with the ailing currency affecting the price of many everyday goods.
Norway's krone has suffered a long-term decline against other major currencies like the euro, dollar and pound this year – which has had a number of knock-ons.
While the krone is down overall, it has fluctuated greatly over the past year, approaching all-time lows against the euro in the spring and November.
One thing worrying many is the view of analysts, who have told The Local that the currency is unlikely to return to historic levels even if it does strengthen.
For example, ten years ago, a euro cost 7.8 kroner, whereas these days, a euro trades for almost 12 kroner. The dollar, too, has strengthened considerably in the long term. A decade ago, a dollar cost 5.8 kroner compared to just over 11 kroner now.
READ ALSO: Will the weak Norwegian krone recover in 2024?
The weak krone exchange rate means a lot more for the wider economy and cost of living than getting a good or bad rate when you exchange your currency or use kroner abroad – it means a more expensive cost of living overall.
Food
A weak krone pushes up the price of food. This is because food from other countries becomes far more expensive to import. These costs are then typically passed onto consumers.
Over the past year, the cost of food in Norway has increased by 8.5 percent according to figures from national data agency Statistics Norway.
As Norway's krone has fallen against almost all other major currencies, with some exceptions, it doesn't matter which part of the world the food comes from – it will be more expensive to import than it was.
Clothes and shoes
Food isn't the only thing Norway imports. C lothes and shoes have also increased prices due to the ailing currency.
Since 2021, the Norwegian krone has weakened against the euro by 21 percent and the dollar by 32 percent.
This means clothes, shoes and sports equipment from abroad all become more expensive overall.
Mortgages
Interest rates in Norway have increased sharply from historically low levels a few years ago. Over the past year, the impact of the krone on interest rates has become a lot more prevalent.
A weak krone contributes to inflation overall, and the Norwegian Central Bank has been raising interest rates to curb inflation.
The weak krone means more inflation, which translates to a higher key policy rate. When the central bank adjusts its rates, commercial banks follow suit. This makes the interest on mortgages more expensive.
Thankfully, the central bank has said it only expects to implement one more interest rate hike. This would arrive in December under the bank's plan.
Holidays and trips abroad
It's not just the money you exchange at the Bureau de Change that has become more expensive; pretty much everything you do on the holiday will be costlier.
Plane tickets and booking hotels have all become costlier, as have eating out, shopping and going for drinks.
DIY
The cost of many materials in Norway has increased as they are imported. This means home renovations are more expensive than they were a few years ago, not just due to inflation but also due to currency exchange rates.
New build homes
Two factors have made newly built homes more expensive. First is the interest rates that have risen. This makes the development more expensive if the developers cover the project with loans, pushing up the costs of the properties when they are finished.
Then, like with DIY, the cost of imported materials also makes building the homes more expensive.
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Norway's krone has suffered a long-term decline against other major currencies like the euro, dollar and pound this year – which has had a number of knock-ons.
While the krone is down overall, it has fluctuated greatly over the past year, approaching all-time lows against the euro in the spring and November.
One thing worrying many is the view of analysts, who have told The Local that the currency is unlikely to return to historic levels even if it does strengthen.
For example, ten years ago, a euro cost 7.8 kroner, whereas these days, a euro trades for almost 12 kroner. The dollar, too, has strengthened considerably in the long term. A decade ago, a dollar cost 5.8 kroner compared to just over 11 kroner now.
READ ALSO: Will the weak Norwegian krone recover in 2024?
The weak krone exchange rate means a lot more for the wider economy and cost of living than getting a good or bad rate when you exchange your currency or use kroner abroad – it means a more expensive cost of living overall.
Food
A weak krone pushes up the price of food. This is because food from other countries becomes far more expensive to import. These costs are then typically passed onto consumers.
Over the past year, the cost of food in Norway has increased by 8.5 percent according to figures from national data agency Statistics Norway.
As Norway's krone has fallen against almost all other major currencies, with some exceptions, it doesn't matter which part of the world the food comes from – it will be more expensive to import than it was.
Clothes and shoes
Food isn't the only thing Norway imports. C lothes and shoes have also increased prices due to the ailing currency.
Since 2021, the Norwegian krone has weakened against the euro by 21 percent and the dollar by 32 percent.
This means clothes, shoes and sports equipment from abroad all become more expensive overall.
Mortgages
Interest rates in Norway have increased sharply from historically low levels a few years ago. Over the past year, the impact of the krone on interest rates has become a lot more prevalent.
A weak krone contributes to inflation overall, and the Norwegian Central Bank has been raising interest rates to curb inflation.
The weak krone means more inflation, which translates to a higher key policy rate. When the central bank adjusts its rates, commercial banks follow suit. This makes the interest on mortgages more expensive.
Thankfully, the central bank has said it only expects to implement one more interest rate hike. This would arrive in December under the bank's plan.
Holidays and trips abroad
It's not just the money you exchange at the Bureau de Change that has become more expensive; pretty much everything you do on the holiday will be costlier.
Plane tickets and booking hotels have all become costlier, as have eating out, shopping and going for drinks.
DIY
The cost of many materials in Norway has increased as they are imported. This means home renovations are more expensive than they were a few years ago, not just due to inflation but also due to currency exchange rates.
New build homes
Two factors have made newly built homes more expensive. First is the interest rates that have risen. This makes the development more expensive if the developers cover the project with loans, pushing up the costs of the properties when they are finished.
Then, like with DIY, the cost of imported materials also makes building the homes more expensive.
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