The Government has defined an inflation target for the monetary policy in Norway. The operational target of monetary policy is low and stable inflation, with annual consumer price inflation of close to 2 percent over time.
Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances.
In real time it will always be difficult to determine which price movements are permanent and those which only have short-term effects on the Consumer Price Index (CPI). In its conduct of monetary policy, Norges Bank will take into account indicators of underlying inflation. Different measures of underlying inflation are discussed in the Monetary Policy Report.
The chart below shows inflation over the past years in percent and the projection for the period ahead. Inflation is measured as the year-on-year rise in the CPI and the CPI adjusted for tax changes and excluding energy products (CPI-ATE). The continuous lines illustrate the actual development in the inflation, while the broken lines illustrate Norges Bank’s projections.
CPI projections from Monetary Policy Report
CPI-ATE projections from Monetary Policy Report
Sources: Statistics Norway and Norges Bank