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INSTANT VIEW 3-Norway's Sept core CPI slows, above forecasts

OSLO, Oct 10 (Reuters) - Norway's core inflation slowed inSeptember but came a touch above expectations while headlineinflation was in line with forecasts, data showed on Wednesday.

The consumer price index (CPI) excluding volatile energyprices rose 1.1 percent year-on-year, while analysts hadforecast a rise of 1.0 percent.

Headline inflation meanwhile came to an annualised 0.5percent, meeting expectations.

Producer prices rose 1.4 percent year-on-year, slowing from4.4 percent growth in August.^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^NORWAY CONSUMER PRICES (pct) Sept 2012 Aug 2012 Sept 2011Core CPI year/year 1.1 1.2 1.2Core CPI month/month 1.1 -0.7 1.2Headline CPI year/year 0.5 0.5 1.6Headline CPI month/month 0.9 -0.4 0.9Index (base 1998) 131.2 130.0 130.6NORWAY PRODUCER PRICES Sept 2012 Aug 2012 Sept 2011Figures (percent)Year-on-year change 1.4 4.4 15.3Month-on-month change -1.1 2.3 1.8Index (base 2000) 243.5 246.1 240.1

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MARKET REACTIONThe Norwegian crown

stood at 7.3800 against theeuro after inflation and PPI data at 0818 GMT, unchanged frombefore the data.

ANALYST COMMENTS

KJERSTI HAUGLAND, SENIOR ECONOMIST, DNB MARKETS

"Core inflation was slightly higher than expected.

"It is still below Norges Bank's projection, but the gap hasnarrowed compared to the August number where Norges Bank'sestimate was a sure miss on the upside.

"The distance to Norges Bank's rate path is now smallercompared to August. That means that a lower inflation thanexpected will have less of an influence on the bank's rate pathwhich they present later in October, as this is a factor thatwill contribute to lowering the rate path, seen in isolation.

"We maintain our forecast that Norges Bank will wait untilOctober next year to hike rates.

ERIK BRUCE, CHIEF ANALYST, NORDEA MARKETS

"It was a little higher than both consensus and we had beenexpected, at 1.1 percent, and inflation was slightly higher thanwe had expected.

"Now the inflation is two tenths below Norges Bank'sexpectations. It is still slightly below the bank's projections,but not as much as expected.

"Inflation will still be one of the things that wouldindicate a slightly lower interest rate path, but it won't havea huge impact and I still do not believe in a rate cut.

"Slightly lower inflation and a slightly weaker crownsuggests a slightly later rate increase, but the money markethas declined a lot, so the way it looks now, there will not beany major changes in the interest rate path that is published atthe end of the month."

IDA WOLDEN BACHE, MACRO ECONOMIST AT HANDELSBANKEN

"Core inflation was a little higher than expected, but notdramatically.

"The rise in prices for food and clothes was as expected.

"Inflation is still below Norges Bank's estimate and lowinflation will in isolation suggest a lower rate path inOctober, but today's numbers are not strengthening such anargument further.

"We expect the first hike in March 2013 and we will not makeany changes based on these figures.

(Reporting by Oslo newsroom)((+47 2293 6977))Keywords: NORWAY CPI/

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