According to Statistics Norway, last year was a special period of price increases. Historically, prices have risen extremely high. Unlike the previous year, in which the price dynamics of most goods and services purchased by households increased significantly, in 2023 the scenario was more nuanced.
Price increase in 2023
The annual dynamics of the Consumer Price Index (CPI) in 2023 was exceptionally high, driven primarily by increases in the prices of food and non-alcoholic beverages. Electricity prices however, they slowed down the overall price increase in 2022–2023. Despite the moderating effect of electricity prices, annual growth remained extremely high at 5,5%. High, although decreasing price dynamics throughout 2023.
The year began with a twelve-month change in the CPI index from January 2022 to January 2023 at the level of 7,0%, gradually falling to 4,8% in December. Price growth stabilized at around 6% in the first half of the year. compared to the previous year. In the second half of 2023, there was a decline in energy prices, which contributed to limiting the overall price dynamics. However, this reduction does not mean a drop in prices; the year was rather a period of strong price growth, excluding energy prices.
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Extremely strong rent growth
Rental prices rose steadily throughout the year, rising 2023% in 3,8 compared to 2022, representing extremely strong rental growth. Rent prices, due to their significant importance in the CPI index, significantly contributed to stabilizing the decline in CPI dynamics in the second half of the year.
Several factors are contributing to the high rent growth, including the ability of landlords to adjust rates on existing contracts based on the past twelve months of CPI growth. In addition, increased costs for landlords, such as higher interest rates and public housing fees, have likely led to cost increases being passed on to tenants in the form of higher rents.
Highest annual increase in food prices since 1982
The main role in the high CPI growth throughout the year was played by food and beverage prices, which increased by 2022% in 2023–10,0. The highest annual dynamics was recorded in the case of fruit and vegetables, which increased by 13,6 and 13,3, respectively. percent Despite a combined 7,6% increase in milk, cheese and egg prices, these prices saw lower growth compared to other food categories.
The annual growth should not be confused with the monthly, twelve-month change published by Statistics Norway (SSB). The annual increase in the tax-adjusted CPI excluding energy (CPI-JAE) increased by 6,2%. in 2022–2023, exceeding growth by 3,9%. in 2022, which indicates a noticeable impact of energy prices and tax changes on CPI growth.
Highest annual growth in imported goods since the late 80s
Energy prices in 2023 were 7,0%. lower compared to 2022, primarily due to falling gas and electricity prices. Lower gas prices and higher levels of water reservoirs contributed to the decline in electricity prices.
The weakening of the Norwegian krone against foreign currencies, combined with a 7,0 percent increase in the price of imported goods, resulted in the highest annual growth in imported goods since the late 80s. Despite a significant slowdown in price growth among trading partners, the weak krone prevented a similar decline in dynamics prices in Norway.
Strong wage growth in 2023: a rebound in price growth?
2023 was not only a year of extremely high price growth, but also wage growth. Statistics from Statistics Norway (SSB) show an increase in average agreed monthly wages of 6,4% from the third quarter of 2022 to the same quarter of 2023 - the highest on record. This wage increase could potentially lead to higher prices if companies pass on the increased wages labor costs on consumers.
While there is no clear indication that increased labor costs have led to higher price increases, the relationship between wage and price growth remains intriguing and key to monitor alongside other factors such as exchange rates and rents influencing price developments in 2024.
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Source: Statistics Norway (SSB), Photo: pixabay
