CPIXE, a New Indicator of Underlying Inflation

The operational target of monetary policy is annual consumer price inflation of approximately 2.5 per cent over time. In general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances are not taken into account. Indicators of underlying inflation seek to remove movements in consumer prices resulting from temporary disturbances. The CPIXE is a new indicator of underlying inflation. This commentary discusses the sensitivity of the new indicator to alternative assumptions about changes in energy prices ahead.publishedVersio

How Many Are Unemployed?

The gap between the official unemployment measures in Norway has recently been unusually wide. In this commentary, we discuss possible explanations for this gap. Part of the difference can be attributed to the fact that the Labour Force Survey (LFS) has captured a marked rise in youth unemployment, a group that is less inclined to register at the Norwegian Welfare and Labour Administration (NAV), but besides that we do not find a full explanation of the gap. In the light of other information and historical relationships in Norway, the development in NAV unemployment appears fairly likely. As the LFS is a sample survey, there will always be a measure of uncertainty associated with the figures. At the same time, the threshold for being counted as unemployed is in practice somewhat lower in the LFS than in NAV.publishedVersio

Evaluation of Norges Bank’s Projections for 2011

Since the conduct of monetary policy relies on projections for economic developments, it is important to evaluate these projections. In this article, we assess Norges Bank's projections for economic developments in 2011. Mainland GDP growth in 2011 was lower than projected in the October 2010 Monetary Policy Report and subsequent Reports through 2011. Increasing uncertainty regarding the global economy from summer onward resulted in a marked shift in sentiment and was a likely factor in dampening activity growth in Norway. An average of projections from other forecasters and projections from the Bank's System for Averaging short‐term Models (SAM) more closely predicted actual developments in 2011. CPI‐ATE inflation was also somewhat lower than expected, though Norges Bank's projections were more accurate than an average of projections from other forecasters. We have also examined the short‐term projections for output and inflation over time. In the past three years, CPI‐ATE inflation and mainland GDP growth have been somewhat lower than expected. When we look at projections over a longer period, CPI‐ATE inflation has been lower than forecast, while GDP growth on average has been approximately as assumed. While the short‐term projections for GDP in the Monetary Policy Report have been more accurate than the projections derived from SAM, CPI‐ATE projections have been approximately as accurate as the projections derived from SAM

CPIXE and Projections for Energy Prices

This paper describes the new indicator of underlying inflation used at Norges Bank, the consumer price index adjusted for tax changes and excluding temporary changes in energy prices (CPIXE). In particular, we discuss the projections for energy prices, which impact on the estimated trend change in energy prices in the CPIXE

Evaluation of Norges Bank’s Projections for 2006

Growth in the mainland economy in 2006 was appreciably higher than projected by Norges Bank and it is likely that the output gap was also more positive than projected. At the same time, consumer price inflation adjusted for tax changes and excluding energy products was lower than expected. Unexpectedly low inflation coupled with higher-than-projected output and employment growth may reflect the influence of unforeseen factors on the supply side of the economy. In recent years, for example, inward labour migration has been higher than assumed by Norges Bank. This has eased labour shortages and contributed to growth in potential output. Productivity growth has also been higher than expected in many industries. Other forecasters’ projections for developments in output and prices in 2006 were not substantially better than Norges Bank’s projections

The Petroleum Sector and the Norwegian Economy

Economic developments in Norway between 2000 and 2014 were marked by the steep rise in oil prices in the same period. Demand from oil companies operating on both the Norwegian continental shelf and in the rest of the world increased sharply, contributing to rapid market growth for Norwegian firms specialising in deliveries to the petroleum sector. In 2014, around 300 000 jobs in the Norwegian economy were likely linked to the petroleum sector, nearly twice as many as at the turn of the millennium. In addition, increased petroleum revenues have provided room for higher consumption. In sum, this has boosted revenue growth for Norwegian firms and pushed up wage growth to a level that has been considerably higher than among Norway’s trading partners. At the same time, developments have been weak for many firms that are exposed to foreign competition, but that do not supply goods and services to the petroleum sector.publishedVersio

How Much of a Tailwind Have We Had from the Weaker Krone?

It is usual to assume that a weaker currency will stimulate exports and improve the balance of trade. Despite the krone’s depreciation in recent years, however, exports have grown little and the non-oil trade deficit has widened. This raises questions about what effects the weaker krone has actually had. We find that exports would probably have been much lower without the depreciation of the krone. Our conclusion, therefore, is that there has been a significant tailwind

CPIXE and Projections for Energy Prices

This paper describes the new indicator of underlying inflation used at Norges Bank, the consumer price index adjusted for tax changes and excluding temporary changes in energy prices (CPIXE). In particular, we discuss the projections for energy prices, which impact on the estimated trend change in energy prices in the CPIXE

CPIXE, a New Indicator of Underlying Inflation

The operational target of monetary policy is annual consumer price inflation of approximately 2.5 per cent over time. In general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances are not taken into account. Indicators of underlying inflation seek to remove movements in consumer prices resulting from temporary disturbances. The CPIXE is a new indicator of underlying inflation. This commentary discusses the sensitivity of the new indicator to alternative assumptions about changes in energy prices ahead

Hvorfor er pris- og kostnadsnivået i Norge så høyt?

Sammenliknet med andre land er de fleste varer og tjenester relativt dyre i Norge. Internasjonale sammenlikninger viser at det generelle pris- og kostnadsnivået som regel er høyere jo rikere et land er. Klassisk teori om prisforskjeller mellom land gir også støtte til en slik sammenheng. Sett i lys av det samlede inntektsnivået fremstår ikke pris- og kostnadsnivået i Norge som spesielt høyt