CPI up 1.3 per cent last 12 months

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The Consumer Price Index (CPI) rose by 0.2 per cent from April 2020 to May 2020, while the CPI-ATE growth was 0.1 per cent in the same period. From May 2019 to May 2020 the CPI rose by 1.3 per cent, while the CPI-ATE increased by 3.0 per cent.

Written by: Gunnar Larsson

Actions taken by the Government to limit the corona virus outbreak have implications for the CPI also in May. Services with close to zero consumption in May accounts for more than 4 per cent of total CPI measured in terms of the CPI weights. More than 2 per cent had their prices estimated by the price development in the CPI-all-item index from April to May while approximately the same share was estimated based on seasonal factors. 

Figure 1. 12-month rate, CPI and CPI-ATE

CPI CPI-ATE
May 2018 2.3 1.2
June 2018 2.6 1.1
July 2018 3 1.4
Aug. 2018 3.4 1.9
Sep. 2018 3.4 1.9
Oct. 2018 3.1 1.6
Nov. 2018 3.5 2.2
Dec. 2018 3.5 2.1
Jan. 2019 3.1 2.1
Feb. 2019 3 2.6
Mar. 2019 2.9 2.7
Apr. 2019 2.9 2.6
May 2019 2.5 2.3
June 2019 1.9 2.3
July 2019 1.9 2.2
Aug. 2019 1.6 2.1
Sep. 2019 1.5 2.2
Oct. 2019 1.8 2.2
Nov. 2019 1.6 2
Dec. 2019 1.4 1.8
Jan. 2020 1.8 2.9
Feb. 2020 0.9 2.1
Mar. 2020 0.7 2.1
Apr. 2020 0.8 2.8
May 2020 1.3 3

Price increase in May

The overall CPI rose by 0.2 per cent from April to May 2020. The increase was mainly caused by a rise in the prices for cars, which increased by 2.2 per cent from last month. Increased prices for electricity, clothes, alcoholic beverages, as well as maintenance and repair of personal transport equipment also contributed to the measured overall rise in May.

Passenger transport by air pulled the CPI in the opposite direction, with an 8.1 per cent price decrease in May. It was the estimated prices for international passenger transport by air which caused the measured decrease. In addition, the prices for food also contributed to lower the increase in the overall CPI, by showing a 0.8 per cent decrease from April to May 2020. It was especially foodstuff associated to the Norwegian National Day that showed a price decrease in May. Furniture and furnishings as well as books also showed a price fall, by 2.9 and 10.6 per cent respectively.

Figure 2. Monthly change in per cent. CPI, CPI-ATE, CPI by divisons

April 2020 - May 2020 April 2019 - May 2019
Miscellaneous goods and services 0.4 -0.2
Restaurants and hotels 0.4 0.9
Education 0 0
Recreation and culture 0.2 0.1
Communications 0 0.4
Transport 0.4 -1.2
Health 0.1 0.3
Furnishings, household equipment and routine maintenance -0.8 -0.9
Housing, water, electricity, gas and other fuels 0.2 -0.1
Clothing and footwear 0.9 1.7
Alcoholic beverages and tobacco 0.6 0
Food and non-alcoholic beverages -0.6 -0.9
CPI -ATE All-item index 0.1 -0.2
CPI All-item index 0.2 -0.3

Increased prices for food last twelve months

The overall CPI rose by 1.3 per cent from May 2019 to May 2020. The increase was mainly caused by prices for food, which rose by 4.9 per cent in the period. It was to a large extent the prices for imported agricultural products that contributed to the increase. Prices for imported agricultural products rose by 12.1 per cent from May 2019 to May 2020. The prices for Norwegian agricultural products increased by 3.3 per cent in the same period.

The increase in the overall CPI was dampened by energy products, which among others consists of prices for electricity and fuel. Energy products collectively showed a 34.1 per cent price fall from May 2019 to May 2020.

Increase in the year-to-year growth

The year-to-year growth rose from 0.8 per cent in April to 1.3 per cent in May. The increase in the year-to-year growth was mainly caused by the price development for passenger transport by air, which in May 2020 was largely based on estimated prices, which includes the beforementioned estimated prices. In addition, the price development for electricity and cars contributed to the rise. The prices for electricity including grid rent rose by 2.4 per cent from April to May 2020, while falling 1.8 per cent in the corresponding period last year. The prices for cars rose more from April to May in 2020, compared to the same period last year.

The year-to-year growth in the CPI-ATE was 3.0 per cent in May 2020, an increase of 0.2 percentage points from April 2020.

Figure 3. 12-month rate. CPI, CPI-ATE, CPI by divisions. May 2019 - May 2020

May 2019 - May 2020
Miscellaneous goods and services 3.6
Restaurants and hotels 1.6
Education 3.5
Recreation and culture 2.8
Communications 4.9
Transport 1.8
Health 3.3
Furnishings, household equipment and routine maintenance 6
Housing, water, electricity, gas and other fuels -4
Clothing and footwear -3.2
Alcoholic beverages and tobacco 3
Food and non-alcoholic beverages 4.7
CPI -ATE All-item index 3
CPI All-item index 1.3

Corona consequences for CPI for May

Measures taken by the Government to limit the corona outbreak have implications for the CPI also for May. Although several services have opened again and are included in the CPI as normal, other services have been treated separately. Services that were still closed or had a consumption close to zero, such as fitness centers, amusement parks, sports events and domestic flights, were estimated with the change in the all-item CPI from April to May. Exceptions were made for services with clear seasonal variation in prices such as international flights and package holidays where the price development was estimated based on seasonal factors. For more information, see Corona consequences for CPI.

Temporarily change in the reduced VAT rate

As one of the measures related to the corona situation, the reduced value added tax (VAT) rate was decreased from 12 per cent to 6 per cent from April 1, 2020. Reduced VAT rates apply to personal transports, hotel accommodations as well as access to cinema, sporting events and amusement parks. In CPI-AT and CPI-ATE, this is treated so that the services related to non-availability due to the corona situation are not affected by the changed VAT rate, while for the services that consumption has been taken place a reduced VAT has been measured.

Seasonally adjusted all-item CPI and all-item CPI-ATE

Statistics Norway publishes each month a seasonally adjusted all-item CPI and all-item CPI-ATE. The seasonal adjustment during the corona crisis is made in a way that the May figures are not included in the data for calculating the seasonal pattern. Technically, in the seasonal adjustment routine, this is done by specifying the period as the extreme value. Statistics Norway's seasonal adjustment of all-item CPI and all-item CPI-ATE is in line with recommendations from Eurostat.

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