By Terje Solsvik
OSLO (Reuters) – Norway’s consumer prices rose sharply in January from a year earlier, official data showed on Monday, strengthening the crown currency ahead of a major policy speech by the central bank governor on Thursday.
Core inflation, a key measure for monetary policy, stood at 2.9% year-on-year, Statistics Norway (SSB) said, up from 1.8% in December, while analysts in a Reuters poll on average had expected a rebound to 2.0%.
Food, transport and several service categories were among the factors pulling up prices, Statistics Norway (SSB) said in a statement.
The central bank, which targets core inflation of 2.0% over time, had forecast a January reading of 2.2%.
The inflation reading surprised “massively on the upside”, SEB economist Erica Blomgren Dalstoe tweeted.
The crown rallied to 10.1179 against the euro following the 0600 GMT data release from 10.1518 earlier.
The currency weakened last year despite several central bank rate hikes and hit an all-time low of 10.3121 against the euro in October.
Central bank governor Oeystein Olsen is due this week to deliver his annual speech to Norwegian business leaders and politicians, in which he is expected to give a broad outline of the country’s economic prospects.
While Norges Bank has said its key interest rate is expected to remain on hold for the foreseeable future, it has also warned that an upwards spiral of inflation could lead to further tightening.
Recent economic data, such as fourth-quarter GDP, has pointed to a slowdown in the Norwegian economy however, lessening the probability of rate hikes, economists have said.
(Editing by Gwladys Fouche and Alex Richardson)