Charts
Inflation Report 3/05
1 Monetary policy
assessments and strategy
Chart 1.1 CPI. Moving 10-year average1) and
variation2). Per cent. Annual figures. 1980 – 20053)
14
14
12
12
10
CPI
10
8
6
8
Inflation target
6
4
4
2
2
0
0
1980 1985 1990 1995 2000 2005
The moving average is calculated 7 years back and 2 years
ahead.
2) The band around the CPI is the variation in the period, measured
by +/- one standard deviation.
3) Projections for 2005 – 2007 from this Report form the basis for
this estimate.
1)
Sources: Statistics Norway and Norges Bank
Chart 1.2 Estimates for the output gap. Level1) and
variation2). Per cent. Annual figures. 1980 – 2005
8
8
4
4
0
0
-4
-4
-8
1980
-8
1985
1990
1995
2000
2005
The output gap measures the difference between actual and
projected potential mainland GDP.
2) The band shows the variation in the output gap measured by +
one standard deviation. The variation is estimated as average
standard deviation in a 10-year period, 7 years back and 2 years
ahead.
1)
Source: Norges Bank
Chart 1.3 CPI and CPI-ATE1). 12-month
change. Per cent. Jan 02 – Sep 05
6
6
4
4
2
0
CPI
CPI-ATE
2
0
-2
-2
-4
2002
-4
1)
2003
2004
2005
CPI-ATE: CPI adjusted for tax changes and excluding energy products.
Source: Statistics Norway
Chart 1.4 3-month real interest rate1) and the neutral
real interest rate in Norway. Per cent. Quarterly figures.
96 Q1 – 08 Q42)
6
5
Real interest
rate
6
5
4
4
3
3
2
1
Interval for
neutral real
interest rate
0
1996 1998 2000 2002 2004 2006 2008
3-month money market rate deflated by inflation measured by
the CPI-ATE.
2) The projected real interest rate for the period 05 Q4 – 08 Q4 is
based on the baseline scenario.
1)
Source: Norges Bank
2
1
0
Chart 1.5a The sight deposit rate in the baseline
scenario with fan chart. Per cent.
Quarterly figures. 04 Q1 – 08 Q4
8
7
8
30% 50% 70% 90%
7
6
6
5
5
4
4
3
3
2
2
1
1
0
2004
0
2005
2006
Source: Norges Bank
2007
2008
Chart 1.5b Import-weighted exchange rate (I-44)1)
in the baseline scenario with fan chart.
Quarterly figures. 04 Q1 – 08 Q4
110
30% 50% 70% 90%
110
100
100
90
90
80
80
70
2004 2005 2006 2007 2008
70
1) A rising
curve denotes a weaker krone exchange rate. It is
assumed that strengthening by a certain percentage is just as
likely as weakening by the same percentage.
Source: Norges Bank
Chart 1.5c Projected CPI-ATE in the baseline
scenario1) with fan chart. 4-quarter change.
Per cent. 04 Q1 – 08 Q4
4
4
30% 50% 70% 90%
3
3
2
2
1
1
0
2004
0
2005
2006
2007
2008
Other measures of underlying inflation are shown in a
separate box in Section 2.
1)
Sources: Statistics Norway and Norges Bank
Chart 1.5d Estimated output gap in the
baseline scenario1) with fan chart. Per cent.
Quarterly figures. 04 Q1 – 08 Q4
2
30% 50% 70% 90%
2
1
1
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Uncertainty concerning the current situation is not taken into
account in the calculation.
1)
Source: Norges Bank
Chart 1.6a Interest rate projections for trading
partners and interest rate differential. Quarterly
figures. 04 Q1 – 08 Q4
5
5
Baseline scenario 2)
4
3
3
Forward interest rates
trading partners1)
2
1
4
2
1
Interest rate differential
against trading partners3)
0
0
-1
2004
-1
2005
2006
2007
2008
Estimated as a weighted average of trading partners' forward rates.
Forward rate at 27 October.
2) As in the two previous reports, the forward rate is adjusted
somewhat as from 2007.
3) Interest rate differential against trading partners in the baseline
scenario from 05 Q4 (broken line).
1)
Source: Norges Bank
Chart 1.6b Trading partners' interest rates1) in the
baseline scenario with fan chart2). Per cent.
Quarterly figures. 04 Q1 – 08 Q4
8
7
8
30% 50% 70% 90%
7
6
6
5
5
4
4
3
3
2
2
1
1
0
2004
0
2005
2006
2007
2008
1)
3-month money market rate.
2)
Fan chart is based on prices for interest rate options.
Sources: Reuters and Norges Bank
Chart 1.7 Projections for the CPI-ATE and output
gap in the baseline scenario. Quarterly figures.
Per cent. 04 Q1 – 08 Q4
3
3
2
2
CPI-ATE
1
1
Output gap
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 1.8a House prices deflated by the house rent
index in the CPI, building costs, household
disposable income and total wage income. Indices,
1985 = 100. Annual figures. 1985 – 20051)
200
Deflated by
house rent
200
Deflated by building costs
150
150
100
100
50
Deflated by
disposable income
Deflated by total
wage income
0
0
1985
1)
50
1990
1995
2000
2005
Projections for 2005.
Sources: Statistics Norway, Norwegian Association of
Real Estate Agents (NEF), Association of Real Estate
Agency Firms (EFF), FINN.no, ECON and Norges Bank
Chart 1.8b House prices. Annual rise.
Per cent. 1992 ― 20081)
18
18
14
14
10
10
6
6
2
2
-2
-2
-6
-6
-10
-10
1992
1)
1996
2000
2004
2008
Projections for 2005 ― 2008.
Sources: Norwegian Association of Real Estate Agents,
Association of Real Estate Agency Firms, Finn.no, ECON
and Norges Bank
Chart 1.8c Credit to households (C2). Annual
percentage change in credit. 1992 – 20081)
14
12
10
8
6
4
2
0
-2
14
12
10
8
6
4
2
0
-2
1992
1)
1996
2000
Projections for 2005 ― 2008.
Source: Norges Bank
2004
2008
Chart 1.9a Sight deposit rate in the baseline
scenario and in the alternatives with stronger trade
shifts and lower wage growth (red line) and higher
inflation (yellow line). Per cent. Quarterly figures.
04 Q1 – 08 Q4
8
7
8
30% 50% 70% 90%
7
6
5
4
6
Higher
inflation
5
4
3
3
2
2
1
0
2004
1
Stronger
trade shifts
2005
2006
Source: Norges Bank
0
2007
2008
Chart 1.9b Projected CPI-ATE in the baseline
scenario and in the alternatives with stronger trade
shifts and lower wage growth (red line) and higher
inflation (yellow line). 4-quarter change.
Per cent. 04 Q1 – 08 Q4
4
4
30% 50% 70% 90%
3
3
2
Higher
inflation
2
1
1
0
2004
Stronger trade
shifts
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
0
Chart 1.9c Estimated output gap in the
baseline scenario1) and in the alternatives with
stronger trade shifts and lower wage growth
(red line) and higher inflation (yellow line). Per
cent. Quarterly figures. 04 Q1 – 08 Q4
2
30% 50% 70% 90%
2
1
1
0
0
-1
-2
2004
Stronger trade
shifts
Higher
inflation
-1
-2
2005
2006
2007
2008
Uncertainty concerning the current situation is not taken into
account in the calculation.
1)
Source: Norges Bank
Chart 1.10 3-month money market rate in the
baseline scenario1) and band with highest and lowest
forward interest rate last 10 days.2) Per cent.
Quarterly figures. 05 Q4 ― 08 Q4
6
6
5
5
Baseline scenario
4
4
Highest and lowest
forward interest rate
3
3
2
2
1
1
0
Oct 05
0
Oct 06
Oct 07
Oct 08
The money market rate is normally about ¼ percentage point
higher than the sight deposit rate.
1)
Highest and lowest forward interest rate in the period 14 – 27
Oct 2005.
2)
Source: Norges Bank
Chart 1.11 Sight deposit rate, Taylor rule,
Orphanides rule and rule with external interest rates.
Inflation as in the baseline scenario. Quarterly
figures. Per cent. 00 Q1 ― 06 Q2
8
Taylor rate
(blue line)
6
4
2
8
6
Orphanides’
rule
(yellow line)
Sight deposit
rate (red line)
Rule with external
interest rates
(green line)
0
2000 2001 2002 2003 2004 2005 2006
Source: Norges Bank
4
2
0
Chart 1.12 Sight deposit rate and interest rate
developments that follow from Norges Bank's
average pattern for the setting of interest rates.1). Per
cent. Quarterly figures. 00 Q1 – 06 Q2
Interest rate movements
that follow from Norges
Bank's average pattern
with a 90% confidence
interval (grey area)
8
6
4
Sight deposit rate
(red line)
8
6
4
2
2
0
2000 2001 2002 2003 2004 2005 2006
0
The interest rate movements are explained by developments in
inflation, mainland GDP growth, wage growth and 3-month interest
rates among trading partners. See Inflation Report 3/04 for further
discussion.
1)
Source: Norges Bank
Chart 1.13 CPI and scaled money supply (M2)1).
Index, 2000 = 1. Annual figures. 1960 – 2004
1.4
1.4
M2
(red line)
1.2
1.2
1.0
1.0
0.8
0.8
CPI
(blue line)
0.6
0.6
0.4
0.4
0.2
0.2
0.0
1960
0.0
1)
1970
1980
1990
M2 is scaled by GDP at constant prices.
Sources: Statistics Norway and Norges Bank
2000
Chart 1.14 Money supply (M2). 12-month growth,
estimated trend growth and intervals.1) Per cent.
Monthly figures. Jan 93 ― Aug 05
14
14
30% 50% 70% 90%
12
12
10
10
8
8
6
6
4
4
2
2
0
0
1993 1995 1997 1999 2001 2003 2005
1) Actual
M2 growth is smoothed. Trend growth is estimated using
a Hodrick-Prescott filter (λ = 100 000). The confidence intervals
are based on the standard deviation calculated using the deviation
between actual M2 growth and trend growth.
Source: Norges Bank
2 The economic situation
Chart 2.1 GDP growth in the US, the euro area and
Japan. Seasonally adjusted volume growth on
previous quarter. Per cent. 03 Q1 – 05 Q2
3
3
US
2
Japan
2
1
1
0
0
Euro area
-1
-1
-2
-2
2003
2004
Sources: EcoWin and Norges Bank
2005
Chart 2.2 Consumer prices. 12-month change. Per
cent. Jan 02 – Sep 05
5
5
US
4
4
Euro area
3
3
2
2
1
UK
0
2002
1)
1
Sweden1)
0
2003
UND1X.
Source: EcoWin
2004
2005
Chart 2.3 Core inflation1). 12-month change. Per
cent. Jan 02 – Sep 05
3
3
Euro area
US
2
2
1
1
UK
Sweden
0
2002
0
2003
2004
2005
US: CPI excl. food and energy. Euro area, UK and
Sweden: CPI excl. energy, food, alcohol and tobacco.
1)
Source: EcoWin
Chart 2.4 Oil price. Brent Blend spot and light
crude oil for future delivery. USD per barrel. Daily
figures. 1 Jan 02 – 27 Oct 05
65
65
Spot
55
55
45
45
35
35
25
15
2002
Delivery in 6-7 years
25
15
2003
2004
Sources: Reuters and EcoWin
2005
Chart 2.5 Petrol and crude oil prices. Index,
Jan 02 = 100. Daily figures. 1 Jan 04 – 27 Oct 05
500
500
Unleaded petrol
400
400
300
300
200
200
Crude oil
100
Jan 04
100
Jul 04
Source: EcoWin
Jan 05
Jul 05
Chart 2.6 Crude oil production in the Gulf of Mexico
shut down due to hurricanes. Share of total production capacity. Per cent. Daily figures. 29 Aug – 30 Nov
in 2004 (Ivan) and 2005 (Katrina, Rita and Wilma)
100
100
Katrina
80
80
Rita
60
Wilma
Ivan
60
40
40
20
20
0
0
Aug
Sep
Oct
Source: Energy Administration Information
Nov
Chart 2.7 Interest rate expectations. Actual and
expected key rate1) at 27 Oct 05 and
24 Jun 05. Daily figures. 2 Jan 03 – 1 Nov 06
6
6
5
5
UK
Norway
4
4
3
3
2
2
Euro area
1
0
2003
Sweden
US
1
0
2004
2005
2006
Broken lines show expectations at 27 October 2005. Dotted lines
show expectations at 24 June 2005 (IR 2/05). Based on FRAs and
futures contracts adjusted for the estimated difference between 3month money market rates and the key rate.
1)
Sources: Reuters and Norges Bank
Chart 2.8 The krone exchange rate (I-44)1). Monthly
figures. Jan 00 – Oct 052). Relative labour costs in
common currency3). Annual figures. Per cent.
2000 – 20054)
85
15
90
Relative labour costs
in manufacturing
(right-hand scale)
10
5
95
0
100
105
-5
I-44
(left-hand scale)
110
2000 2001 2002 2003 2004 2005
1) A rising
-10
-15
curve denotes a stronger krone exchange rate.
2) Figures for Oct 05 are the average for the period 1 – 27 Oct 2005.
3) Deviation from average 1970 -2004.
4) 2005 is based on wage growth in the baseline scenario and TWI
from 1 Jan – 27 Oct 2005.
Source: Norges Bank
Chart 2.9 Non-oil government budget deficit
and petroleum investment. In billions of NOK.
Annual figures. 2000 – 20061)
200
150
200
Non-oil deficit
Petroleum investment
150
100
100
50
50
0
0
2000
1)
2003
2006
Projections for 2005 -2006.
Sources: Statistics Norway, Ministry of Finance and
Norges Bank
Chart 2.10 Developments in some sub-indices on
the Oslo Stock Exchange. Index, 2 Jan 96 = 100.
Daily figures. 2 Jan 96 – 27 Oct 05
550
550
Financial
450
ICT 1)
OSEBX
350
350
250
450
Energy
250
150
150
50
1996
Manufacturing 2)
1) Average
2) Average
1998
2000
50
2002
2004
of IT and telecommunications indices.
of industrials and materials indices.
Sources: Bloomberg and Norges Bank
Chart 2.11 Demand. Average quarterly growth
(annualised) in the upturn of the last 9 quarters1).
Per cent
30
25
30
First 5 quarters
Last 4 quarters
25
20
20
15
15
10
10
5
5
0
0
Priv.
cons.
1)
Public Mainl. Petr. Exp.
cons. investm. investm. trad.
goods
03 Q2 – 05 Q2.
Sources: Statistics Norway and Norges Bank
Chart 2.12 Credit to households1) and
enterprises2). 12-month change. Per cent.
Jan 02 – Aug 05
15
15
Households
12
12
9
9
6
Enterprises
6
3
3
0
0
-3
2002
-3
1)
2003
2004
From domestic sources (C2).
credit to mainland Norway (C3).
2) Total
Source: Norges Bank
2005
Chart 2.13 Turnover rate1) for new dwellings in
Eastern Norway. Per cent. Feb 02 – Oct 05
15
15
10
10
5
5
0
2002
0
2003
2004
2005
Dwellings sold in last 2 months as a percentage of total number
of new dwellings for sale in building projects.
1)
Source: ECON
Chart 2.14 Imports (total) and exports of
traditional goods and services1). Volume index, 02
Q1 = 100. Quarterly figures. 02 Q1 – 05 Q2
130
130
Imports
120
110
120
110
Exports
100
90
2002
1)
100
90
2003
Travel and other services.
Source: Statistics Norway
2004
2005
Chart 2.15 Mainland GDP. Seasonally adjusted,
annualised quarterly growth. Per cent.
02 Q1 – 05 Q41)
6
6
3
3
0
0
-3
-3
02 Q1
1)
03 Q1
04 Q1
05 Q1
Projections for 05 Q3 and 05 Q4.
Sources: Statistics Norway and Norges Bank
Chart 2.16 Mainland GDP, employment and
productivity1). Average quarterly growth (annualised)
in the upturn of the last 9 quarters2). Per cent
5
5
First 5 quarters
4
Last 4 quarters
4
3
3
2
2
1
1
0
0
Mainland
GDP
No.
employed
Personhours
worked
Productivity
Gross product per person-hour.
2) 03 Q2 – 05 Q2.
1)
Sources: Statistics Norway and Norges Bank
Chart 2.17 Number employed. Developments after
the start of a cyclical upturn. Index, quarter 0 = 100
110
110
82 Q4
91 Q4
03 Q1
106
106
102
102
98
98
-3
0
3
6
9
12
Quarters
Sources: Statistics Norway and Norges Bank
15
Chart 2.18 Unemployed. LFS unemployment,
registered unemployed and persons on ordinary
labour market programmes. In thousands.
Seasonally adjusted.
Monthly figures. Jan 00 – Oct 05
125
125
Registered unemployed and on
labour market programmes
100
75
100
LFS unemployment
Registered unemployed
50
75
50
2000 2001 2002 2003 2004 2005
Sources: Statistics Norway and the Directorate of Labour
Chart 2.19 Estimates for the output gap.
Per cent. Annual figures. 1983 – 2005
5
5
3
3
1
1
-1
-1
-3
-3
-5
1983 1987 1991 1995 1999 2003
-5
Source: Norges Bank
Chart 2.20 Capacity utilisation in manufacturing.
Trend. Per cent. Quarterly figures. 90 Q1 – 05 Q2
85
85
83
83
81
81
79
Average
79
77
77
75
1990
75
1994
1998
2002
Sources: Statistics Norway and Norges Bank
Chart 2.21 Employment and person-hours worked.
Percentage deviation from trend1). Quarterly figures.
82 Q2 – 05 Q2
5
3
5
Man-hours gap
3
1
1
-1
-1
-3
Employment gap
-5
1982 1986 1990 1994 1998 2002
Trend calculated using HP filter. See Staff Memo 2005/2
(www.norges-bank.no) for further information.
1)
Sources: Statistics Norway and Norges Bank
-3
-5
Chart 2.22 CPI-ATE1). Seasonally adjusted
monthly change. 3-month moving average
(centred), annualised. Jan 05 – Dec 052)
4
4
2
2
0
0
-2
-2
Jan 05
1) CPI-ATE:
Apr 05
Jul 05
Oct 05
CPI adjusted for tax changes and excluding energy
products.
2) Projections for Sep 05 – Dec 05.
Sources: Statistics Norway and Norges Bank
Chart 2.23 Share of imports of clothing and footwear
from low-cost countries1). Per cent. Monthly figures.
Jan 01 – Sep 05
100
100
90
90
80
80
Volume
70
70
60
60
50
40
2001
50
Value
40
2002
2003
2004
2005
Estonia, Latvia, Lithuania, Moldova, Poland, Romania,
Slovenia, Czech Republic, Turkey, Hungary, Bangladesh,
Philippines, Hong Kong, India, Indonesia, Cambodia, China,
Malaysia, Singapore, South Korea, Thailand, Taiwan and
Vietnam.
1)
Sources: Statistics Norway and Norges Bank
Chart 2.24 Share of imports of audiovisual
equipment from low-cost countries1). Per cent.
Monthly figures. Jan 01 – Sep 05
60
60
50
50
Volume
40
40
30
30
20
20
10
0
2001
Value
10
0
2002
2003
2004
2005
Estonia, Latvia, Lithuania, Moldova, Poland, Romania,
Slovenia, Czech Republic, Turkey, Hungary, Bangladesh,
Philippines, Hong Kong, India, Indonesia, Cambodia, China,
Malaysia, Singapore, South Korea, Thailand, Taiwan and
Vietnam.
1)
Sources: Statistics Norway and Norges Bank
Chart 2.25 Share of imports of furniture and white
goods from low-cost countries1). Per cent. Monthly
figures. Jan 01 – Sep 05
40
30
40
Volume
30
20
20
Value
10
0
2001
10
0
2002
2003
2004
2005
Estonia, Latvia, Lithuania, Moldova, Poland, Romania, Slovenia,
Czech Republic, Turkey, Hungary, Bangladesh, Philippines, Hong
Kong, India, Indonesia, Cambodia, China, Malaysia, Singapore,
South Korea, Thailand, Taiwan and Vietnam.
1)
Sources: Statistics Norway and Norges Bank
Chart 2.26 CPI-ATE1). Total and by supplier sector2).
With projections from IR 2/05 (broken line). 12month change. Per cent. Jan 02 – Sep 05
6
6
Goods and services produced in Norway
4
2
4
2
CPI-ATE
0
0
-2
-2
-4
-4
Imported consumer goods
-6
2002
2003
2004
-6
2005
1) CPI-ATE:
2) Norges
CPI adjusted for tax changes and excluding energy products.
Bank's projections.
Sources: Statistics Norway and Norges Bank
Chart 2.27 CPI-ATE1) and estimates for the output
gap2). Quarterly figures. Per cent. 00 Q1 – 05 Q43)
4
4
2
CPI-ATE
0
2
0
Output gap
-2
2000 2001 2002 2003 2004 2005
-2
CPI-ATE: CPI adjusted for tax changes and excluding energy products.
Quarterly figures for the output gap have been derived from the annual
figures.
3) CPI-ATE projection for 05 Q4.
1)
2)
Sources: Statistics Norway and Norges Bank
3 Developments ahead
Chart 3.1 Private consumption as a share of
mainland GDP. Constant and current prices.
Annual figures. Per cent. 1978 – 20081)
62
60
62
Share of
consumption,
value
60
58
58
56
56
54
Share of
consumption, volume
54
52
52
1978 1983 1988 1993 1998 2003 2008
1)
Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
Chart 3.2 Real growth in household disposable
income1) and consumption. Annual figures.
Per cent. 1990 – 20082)
8
Real income growth
Real growth in
consumption
6
8
6
4
4
2
2
0
0
-2
-2
1990 1993 1996 1999 2002 2005 2008
1) Adjusted
2)
for estimated reinvested share dividends since 2001.
Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
Chart 3.3 Household saving ratio and net lending as
a share of disposable income.1) Annual figures.
1980 – 20082)
10
10
Saving ratio
5
5
0
0
-5
-5
-10
Net lending
-15
1980 1985 1990 1995 2000 2005
1) Adjusted
-10
-15
for estimated reinvested share dividends since 2001.
2) Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
Chart 3.4 Underlying spending growth in the
government budget and nominal growth in mainland
GDP. Growth on previous year. Per cent.
1985 – 20061)
15
15
12
12
9
Underlying
spending growth
6
3
6
Nominal growth in
mainland GDP
0
3
0
1985 1988 1991 1994 1997 2000 2003 2006
1)
9
Projections for 2005 and 2006 from the Ministry of Finance.
Sources: Ministry of Finance (National Budget 2006) and
Statistics Norway
Chart 3.5 Structural non-oil deficit and expected real
return on the Government Petroleum Fund. In billions
of 2006-NOK. Annual figures. 2001 – 2010
120
Use of petroleum revenues over and
above the 4 per cent rule
Expected real return
100
120
100
80
80
60
60
40
40
20
20
0
0
2001
2003
2005
2007
2009
Source: Ministry of Finance (National Budget 2006)
Chart 3.6 Oil price (Brent Blend) in USD per barrel.
Futures prices from 24 Jun 05 and 27 Oct 05.
Daily figures. 2 Jan 02 – 27 Oct 08
65
27 October 2005
55
24 June 2005
IR 2/05
65
55
45
45
35
35
25
25
15
2002
15
2004
Source: Reuters
2006
2008
Chart 3.7 Investment intentions survey for oil and
gas activities incl. pipeline transport. Estimated and
actual investment. In billions of NOK
80
2005
80
2004
2006
60
2003
60
2002
40
40
20
20
0
May
Aug Nov
Estimate published
previous year
Feb May
Aug Nov
Estimate published
same year
Source: Statistics Norway
Feb
0
Final figures
Chart 3.8 Investment in oil and gas recovery incl.
pipeline transport. Investment level in billions of NOK
(constant 2002-prices) and annual growth in per cent.
1995 – 20081)
30
100
Annual growth
(left-hand scale)
20
90
10
80
0
70
-10
Investment level
(right-hand scale)
-20
50
-30
1995
1)
60
1998
2001
2004
Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
2007
Chart 3.9 Investment intentions survey for power
supply sector. Estimated and actual investment. In
billions of NOK
12
10
12
2006
2005
10
2004
8
8
2003
6
2002
6
4
4
2
2
0
May Aug Nov
Feb May
Estimate published
previous year
Source: Statistics Norway
Aug Nov
Estimate published
same year
Feb
Final figures
0
Chart 3.10 GDP and fixed investment. Mainland
Norway. Percentage deviation from trend1).
Quarterly figures. Per cent. 80 Q1 – 08 Q22)
20
GDP
(right-hand scale)
4
10
2
0
0
-10
-2
Fixed investment,
(left-hand scale)
-20
1980 1985 1990 1995 2000 2005
Trend calculated using HP filter. See Staff Memo 2005/2
(www.norges-bank.no) for further details.
2) Based on annual projections for 2005 – 2008.
1)
Sources: Statistics Norway and Norges Bank
-4
Chart 3.11 Oil price in NOK and terms of trade.
Export price index relative to import price index,
1990 = 1. Quarterly figures. 90 Q1 – 05 Q2
400
Oil price in NOK
(left-hand scale)
1.4
Total goods and
services (righthand scale)
300
1.2
200
Traditional goods
and services
(right-hand scale)
100
0
1990
1
0.8
1993
1996
1999
2002
Sources: EcoWin and Statistics Norway
2005
Chart 3.12 International prices for industrial
commodities in USD. Indices, 2000 = 100. Weekly
figures. Week 1 2002 – Week 42 2005
160
160
140
Agricultural products
excl. food
140
120
120
100
80
60
2002
Total
industrials
100
80
Metals
60
2003
Source: EcoWin
2004
2005
Chart 3.13 Change in employment on previous year.
Per cent. Unemployment1) as a percentage of labour
force. Annual figures. 1980 – 20082)
4
8
LFS unemployment rate
(right-hand scale)
2
6
0
4
-2
2
Number employed
(left-hand scale)
0
-4
1980
1)
2)
1985
1990
1995
2000
LFS unemployment.
Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
2005
Chart 3.14 Labour force as a percentage of
population aged 16 – 74 (labour force participation
rate). Per cent. Annual figures. 1980 – 20081)
75
75
73
73
71
71
69
69
67
67
65
65
1980 1984 1988 1992 1996 2000 2004 2008
1)
Projections for 2005 – 2008.
Sources: Statistics Norway and Norges Bank
Chart 3.15 Composition of the population. Change
for various age groups from 2004 to 2008.
Percentage points. Labour force participation rates
for 2004 in brackets
2
2
1
1
0
0
-1
-1
-2
(49.1)
(76.5) (87.1)
(87.3)
(62.3)
(18.7)
16-19 20-29 30-39 40-54 55-66 67-74
Sources: Statistics Norway and Norges Bank
-2
Chart 3.16 Annual wage growth1) and LFS
unemployment. Per cent. Annual figures.
1993 – 20082)
Annual wage growth
6
6
4
4
Unemployment rate
2
2
0
0
1993
1996
1999
2002
2005
2008
1) Average
for all groups. Including estimated costs of increase in
number of vacation days and introduction of compulsory
occupational pension.
2) Projections for 2005 – 2008.
Sources: Technical Reporting Committee on Income
Settlements, Statistics Norway and Norges Bank
Chart 3.17 CPI and CPI-ATE1).
12-month change. Per cent. Jan 02 – Dec 082)
6
4
6
4
CPI
2
2
CPI-ATE
0
0
-2
2002
-2
2004
2006
2008
CPI-ATE: CPI adjusted for tax changes and excluding energy
products.
2) Projections for Oct 05 – Dec 08.
1)
Sources: Statistics Norway and Norges Bank
Chart 3.18 Consumer prices adjusted for tax
changes1). Imported consumer goods. 12-month
change. Per cent. Jan 90 – Sep 05
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
1990
-6
1)
1993
1996
1999
2002
Norges Bank's calculations up to December 2003.
Sources: Statistics Norway and Norges Bank
2005
Chart 3.19 Indicator of external price impulses to
imported consumer goods measured in foreign
currency. Annual figures. Per cent. 1995 – 20081)
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
1995
1)
1998
2001
Projections for 2005 – 2008.
Source: Norges Bank
2004
2007
Chart 3.20 CPI-ATE1). Total and by supplier
sector2). 12-month change. Per cent.
Jan 02 – Dec 083)
6
Goods and services produced in Norway
4
2
0
6
4
2
CPI-ATE
0
-2
-2
Imported
consumer goods
-4
-4
-6
2002
-6
2004
2006
2008
CPI-ATE: CPI adjusted for tax changes and excluding energy
products.
2) Norges Bank's calculations.
3) Projections for Oct 05 – Dec 08.
1)
Sources: Statistics Norway and Norges Bank
Boxes
Uncertainty surrounding
future interest rate
developments
Chart 1 3-month money market rate and forward
rates at time of publication of the Inflation Report.
Per cent. Quarterly figures. 99 Q1 – 05 Q3
8
8
IR 2/01
IR 2/02
IR 2/00
6
6
IR 1/03
4
IR 2/99
IR 2/03
Forward interest
rates
2
IR 2/04
3-month money
market rate
0
1999 2000 2001 2002 2003 2004 2005
Source: Norges Bank
4
2
0
Chart 2 Average deviation between forward interest
rates and actual 3-month money market rate in the
period 1999 – 2005. Absolute value. Percentage
points
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
1 2 3 4 5 6 7 8 9 10 11 12
Quarters ahead
Source: Norges Bank
Chart 3a Sight deposit rate in the baseline scenario
with fan chart based on historical interest rate
developments. Per cent. Quarterly figures.
05 Q1 – 08 Q3
8
30% 50% 70% 90%
8
6
6
4
4
2
2
0
2005
0
2006
Source: Norges Bank
2007
2008
Chart 3b Sight deposit rate in the baseline scenario
with fan chart based on interest rate options1). Per
cent. Half-yearly figures. 05 H1 – 08 H2
8
30% 50% 70% 90%
8
6
6
4
4
2
2
0
2005
0
1)
2006
2007
2008
Based on options prices at 27 October 2005.
Source: Norges Bank
Chart 4a US. 3-month money-market rate and
forward interest rate with fan chart based on
options prices calculated in June 2002. Per cent.
Half-yearly figures. 01 H1 – 05 H1
12
12
30% 50% 70% 90%
10
10
8
8
Forward
interest rate
6
6
4
4
2
2
0
2001
Actual interest rate
2002
2003
Source: Norges Bank
0
2004
2005
Chart 4b Norway. 3-month money-market rate and
forward interest rate with fan chart based on
options prices calculated in June 2002. Per cent.
Half-yearly figures. 01 H1 – 05 H1
12
30% 50% 70% 90%
10
12
Forward interest
rate
10
8
8
6
6
4
2
0
2001
4
Actual interest
rate
2
0
2002
2003
Source: Norges Bank
2004
2005
Chart 5 The sight deposit rate in the baseline
scenario with fan chart. Per cent. Quarterly
figures. 04 Q1 – 08 Q4
8
7
8
30% 50% 70% 90%
7
6
6
5
5
4
4
3
3
2
2
1
1
0
2004
0
2005
2006
Source: Norges Bank
2007
2008
Chart 6 Projected CPI-ATE in the baseline
scenario1) with fan chart. 4-quarter change.
Per cent. 04 Q1 – 08 Q4
4
4
30% 50% 70% 90%
3
3
2
2
1
1
0
2004
0
2005
2006
2007
2008
Other measures of underlying inflation are shown in a
separate box in Section 2.
1)
Sources: Statistics Norway and Norges Bank
Accuracy of short-term
interest rate expectations
Chart 1 Interval for the sight deposit rate at the end
of each strategy period and actual developments.
Daily figures. Per cent. 1 Jan 03 – 27 Oct 05
8
8
3/02
6
4
Strategy period
6
1/03
2/03
4
3/03
2
0
2003
1/04 2/04
2/05
1/05
3/04
Sight
deposit rate
2
0
2004
Source: Norges Bank
2005
Monetary policy
since 30 June 2005
Chart 1 Interval for the sight deposit rate at the end
of each strategy period and actual developments.
Daily figures. Per cent. 1 Jan 03 – 27 Oct 05
8
8
3/02
6
4
Strategy period
6
1/03
2/03
4
3/03
2
0
2003
1/04 2/04
2/05
1/05
3/04
Sight
deposit rate
2
0
2004
Source: Norges Bank
2005
Price developments
Chart 1 CPI, CPI-AT1) and CPI-ATE2). 12-month
change. Per cent. Jan 02 – Sep 05
6
6
4
4
2
0
CPI
CPI-ATE
-2
-4
2002
2
0
-2
CPI-AT
-4
2003
2004
2005
CPI-AT: CPI adjusted for tax changes.
CPI-ATE: CPI adjusted for tax changes and excluding energy
products.
1)
2)
Source: Statistics Norway
Chart 2 CPI-ATE1) incl. and excl. prices for clothing
and footwear2). Monthly change. Per cent.
Jun 03 – Sep 05
1.0
1.0
CPI-ATE
0.5
0.5
0.0
0.0
-0.5
CPI-ATE excluding
clothing and
footwear
-0.5
-1.0
Jun 03 Dec 03 Jun 04 Dec 04 Jun 05
-1.0
CPI-ATE: CPI adjusted for tax changes and excluding energy
products.
2) Norges Bank's calculations.
1)
Sources: Statistics Norway and Norges Bank
Chart 3 Prices for some imported consumer goods.
12-month change. Per cent. Jan 02 – Sep 05
5
5
Cars
0
0
-5
-5
Audiovisual
equipment
-10
-10
Clothing and footwear
-15
2002
-15
2003
Source: Statistics Norway
2004
2005
Chart 4 Prices for goods and services produced in
Norway1). 12-month change. Per cent.
Jan 02 – Sep 05
7
Services with wages as a dominant factor (7)
7
5
5
3
3
1
-1
House rents
(18)
1
Consumer goods produced
in Norway2) (20)
-3
2002
Other
services (20)
-1
-3
2003
2004
2005
1) Adjusted
for tax changes and excluding energy products.
Percentage share of CPI-ATE in brackets. Norges Bank's
calculations up to December 2003.
2) Excluding energy and agricultural and fish products.
Sources: Statistics Norway and Norges Bank
Chart 5 Three indicators of underlying inflation.
12-month change. Per cent. Jan 02 – Sep 05
5
4
5
Weighted median1)
4
Trimmed mean2)
3
3
2
2
1
1
CPI-ATE
0
0
-1
2002
-1
2003
2004
2005
Estimated on the basis of 93 sub-groups of the CPI.
Price changes accounting for 20 per cent of the weighting
base are eliminated.
1)
2)
Source: Statistics Norway
Chart 6 Oil price1) and components of the CPI
that are particularly affected by the oil price.
12-month change. Per cent. Sep 05
40
40
30
30
20
20
10
10
0
0
Oil price
1)
Petrol in Transport
CPI services in
CPI
Brent Blend spot.
Sources: Statistics Norway and Reuters
CPI
Output gap uncertainty
Chart 1 Estimate and uncertainty for the output gap.
Per cent. Quarterly figures. 04 Q1 – 05 Q2
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
Mar 04
-3
Sep 04
Source: Norges Bank
Mar 05
Increased imports from
low-cost countries
Chart 1 Cumulative change in share of imports from various segments since 2000.
Percentage points
10
Furniture and household articles
0
10
30
0
0
Audiovisual equipment
0
-10 -30
-10
2001 2002 2003 2004
EU15 and EFTA
Asia ex. Jap. and China
30 15
Clothing and footwear
0
0
-30 -15
2001 2002 2003 2004
China
Sources: Statistics Norway and Norges Bank
US and Japan
15
-15
2001 2002 2003 2004
Europe excl. EU 15 and EFTA
Chart 2 Former and new indicators of external price
impulses. Index, 01 Q1 = 100. Quarterly figures.
98 Q1 – 05 Q2
105
105
100
IPC former
100
95
95
IPC new
90
1998
90
2000
Source: Norges Bank
2002
2004
Chart 3 Former and new indicators of external price impulses to some product groups.
Index, 01 Q1 = 100. Quarterly figures. 01 Q1 – 05 Q2
110
Furniture and household articles
110
Audiovisual equipment
110
Clothing and footwear
110
IPC former
100
100
100
IPC new
90
90
IPC former
IPC former
90
100
90
IPC new
80
80
70
70
2001
2003
Source: Norges Bank
2005
2001
IPC new
2003
2005
80
80
70
2001
70
2003
2005
Effects of high oil prices on
the world economy
Chart 1 Oil price and estimates of the output gap
(per cent) in the OECD countries and G7. Oil price
in USD per barrel. Annual figures. 1971 – 2004
5.0
2.5
G7
(left-hand
scale)
40
Oil price
(right-hand scale)
OECD
(left-hand scale)
30
0.0
20
-2.5
10
-5.0
0
1970
1980
1990
2000
Sources: OECD Economic Outlook, EcoWin, Reuters
and Norges Bank
Chart 2 Oil intensity. Kilos oil per unit of real GDP
adjusted for purchasing power parity.
Index, 1971 = 100. Annual figures. 1971 – 2004
120
120
Non-OECD
countries
100
100
80
80
60
60
OECD
40
40
20
20
0
0
1970
1980
1990
Sources: IMF and Norges Bank
2000
Chart 3 Real oil price and nominal oil price. USD
per barrel. Real price in 2004-USD, deflated by the
CPI in the US. Monthly figures. Jan 70 – Sep 05
120
120
Real oil price
100
100
80
Nominal oil price
80
60
60
40
40
20
20
0
1970
0
1980
1990
2000
Sources: EcoWin, Reuters and Norges Bank
The projections in Inflation
Report 2/05 and 3/05
Chart 1 CPI-ATE1). Total and by supplier sector2).
Actual inflation and projections in IR 2/05 (broken
line). 12-month change. Per cent. Jan 04 – Dec 05
4
4
Goods and services produced in Norway
2
2
CPI-ATE
0
0
-2
-2
-4
Jan 04
1)
2)
Imported consumer goods
-4
Jul 04
Jan 05
Jul 05
CPI-ATE: CPI adjusted for tax changes and excluding energy products.
Norges Bank's calculations.
Sources: Statistics Norway and Norges Bank
Chart 2 CPI-ATE. Projections in IR 2/05, projections
from a time series model and actual price
movements. 12-month change. Per cent.
Jan 05 – Sep 05
1.5
Projections IR 2/05
1.3
1.3
Time series
model
1.1
0.9
1.5
Actual CPI-ATE
1.1
0.9
0.7
0.7
0.5
0.5
Jan 05 Mar 05 May 05 Jul 05 Sep 05
Sources: Statistics Norway and Norges Bank
Chart 3 3-month money market rate1) in baseline
scenario in IR 2/05 and 3/05. Fan around interest
rate from IR 2/05. Per cent. Quarterly figures.
O4 Q1 – 08 Q4
8
7
6
5
8
30% 50% 70% 90%
7
Interest rate in IR 3/05
Interest rate in IR 2/05
6
5
4
4
3
3
2
2
1
1
0
2004
0
2005
2006
2007
2008
The money market rate is normally about ¼ percentage point
higher than the sight deposit rate.
1)
Source: Norges Bank
Chart 4 Krone exchange rate (I-44)1) in baseline
scenario in IR 2/05 and 3/05. Fan around
exchange rate from IR 2/05. Quarterly figures.
04 Q1 – 08 Q4
110
30% 50% 70% 90%
100
110
I-44 in IR 3/05
I-44 in IR 2/05
100
90
90
80
80
70
2004
70
2005
1) A rising
2006
2007
2008
curve denotes a weaker krone exchange rate. It is
assumed that strengthening by a certain percentage is just as
likely as weakening by the same percentage
Source: Norges Bank
Chart 5 Estimates for output gap1) in IR 2/05
and 3/05. Fan2) around estimate in IR 2/05. Per
cent. Quarterly figures. 04 Q1 – 08 Q4
2
2
1
1
0
0
30% 50% 70% 90%
-1
-2
2004
Output gap in IR 3/05
Output gap in IR 2/05
2005
2006
2007
-1
-2
2008
The output gap measures the difference between actual and
trend mainland GDP.
2) Uncertainty concerning the current situation is not taken into
account in the calculation.
1)
Sources: Norges Bank
Chart 6 Projections for CPI-ATE1) in IR 2/05 and
3/05. Fan around projection in IR 2/05. Per cent.
Quarterly figures. 04 Q1 – 08 Q4
4
4
30% 50% 70% 90%
3
3
2
2
1
1
0
-1
2004
CPI-ATE in IR 3/05
CPI-ATE in IR 2/05
0
-1
2005
2006
2007
2008
CPI-ATE: CPI adjusted for tax changes and excluding energy
products
1)
Sources: Statistics Norway and Norges Bank
Chart 7 Mainland GDP. The last two projections
published for 20061). Percentage growth
4
4
3
3
2
2
1
1
0
0
May Oct
FIN
1) All
Jun Sep
SN
Jun Oct
CF
Jun Nov
NB
projections published in 2005.
Sources: Revised National Budget 2005,
National Budget 2006, Economic Survey 2/05
and 3/05, Inflation Report 2/05 and 3/05
Consensus Forecasts June and October 2005
Chart 8 CPI-ATE. The last two projections
published for 20061). Percentage rise
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
1) All
May Oct
FIN
Jun
Sep
SN
Jun
Nov
NB
projections published in 2005.
Sources: Revised National Budget 2005,
National Budget 2006, Economic Survey 2/05
and 3/05, Inflation Report 2/05 and 3/05
0.0
Annex I
Regional network
Chart 1 Norges Bank’s regional network: demand
and production. Index1). Oct 02 – Sep 05
5
Suppliers to the petroleum
industry
3
3
Construction
1
5
Export industry
-1
1
-1
All industries
-3
-3
-5
-5
2002
2003
2004
2005
The scale runs from -5 to +5, where -5 indicates a large fall and
+5 indicates strong growth. See article "Norges Bank's regional
network" in Economic Bulletin 3/05 for further information.
1)
Source: Norges Bank
Chart 2 Norges Banks regional network:
investment plans. Change in investment in next
6 – 12 months. Index1). Oct 02 – Sep 05
5
3
5
3
Municipal and
hospital sector
Retail trade
1
-1
1
Services
-1
Manufacturing
-3
-3
-5
-5
2002
2003
2004
2005
The scale runs from -5 to +5, where -5 indicates a large fall and
+5 indicates strong growth. See article "Norges Bank's regional
network" in Economic Bulletin 3/05 for further information.
1)
Source: Norges Bank
Annex II
Charts
Chart 1 Norwegian interest rates. 3-month money market rate, sight
deposit rate and 10-year government bond yield. Monthly figures.
Jan 95 – Sep 05
10
10
8
10-year government
bond yield
3-month money
market rate
8
6
6
4
4
2
Sight deposit rate
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Norges Bank
2
0
Chart 2 3-month interest rates in the US, the euro area and Japan.
Monthly figures. Per cent. Jan 95 – Sep 05
10
10
8
8
US
6
4
6
Euro area1)
4
2
2
Japan
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1) Theoretical
ECU rate up to and including December 1998.
Source: EcoWin
0
Chart 3 3-month interest rates in the UK, Sweden and among trading
partners. Per cent. Monthly figures. Jan 95 – Sep 05
10
8
10
Sweden
6
8
UK
4
2
4
Trading partners
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sources: EcoWin and Norges Bank
6
2
0
Chart 4 Trade-weighted exchange rate index (TWI) and import-weighted
exchange rate (I-44).1) Monthly figures. Jan 95 – Sep 05
115
115
Trade-weighted exchange rate
index, TWI (1990 = 100)
110
110
105
105
100
100
95
Import-weighted exchange
rate, I-44
(1995 = 100)
90
85
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1) A rising
curve denotes a weaker krone exchange rate.
Source: Norges Bank
95
90
85
Chart 5 Bilateral exchange rates1). Monthly figures. Jan 95 – Sep 05
10
NOK/USD
(left-hand scale)
NOK/EUR
(left-hand scale)
9
110
100
8
90
7
NOK/SEK
(right-hand scale)
80
6
70
5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
60
1) A rising
curve denotes a weaker krone exchange rate.
Source: Norges Bank
Chart 6 The credit indicator (C2), credit to households and total credit to the nonfinancial private sector and municipalities, mainland Norway (C3). 12-month rise.
Per cent. Jan 97 – Aug 05
20
20
15
15
Credit to households
10
C2
5
C3 Mainland Norway
0
1997
10
5
0
1998
1999
Source: Norges Bank
2000
2001
2002
2003
2004
2005