Inflation in Norway

A short history of inflation in Norway

Oil and the Inflation Years (1973 to 1990)

Norwegian inflation ran into double figures through much of the 1970s and 1980s. Oil began flowing from the North Sea in the early 1970s, and spending the proceeds as they arrived pushed up wages and prices in an economy that could not expand fast enough to meet the demand; the krone was devalued several times.

The Fund and the Target (1990 onwards)

Norway's answer was to stop spending the oil money as it came. The sovereign wealth fund established in 1990 takes in the petroleum revenue and lends it abroad, with only the expected real return transferred to the budget each year, which insulates the domestic economy from the oil price. An inflation target followed in 2001, and Norwegian inflation has been moderate since.

Post-Covid Inflation (2021 to 2023)

In Norway, prices rose fastest in October 2022, at 7.5%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.