OSLO: Norwegian inflation is forecast to accelerate in 2018 to 2.0 percent for the year from 1.8 percent in 2017, a publicly appointed commission said on Monday, pointing to higher wage growth in the coming year.
With members from labour unions, employers' federations and Statistics Norway, the commission is a key part of the preparations for Norway's annual round of collective bargaining, which is due to start in March.
By forging a common understanding of historical pay data and forward-looking inflation forecasts, unions and employers can more easily come to an agreement on wage deals.
Overall, Norwegian wages grew by 2.3 percent on average in 2017 and manufacturing pay rose by 2.5 percent, the commission said. The central bank late last year predicted that wages will rise by 2.9 percent in 2018.
"Norwegian industry appears headed towards better times, which will likely also be reflected in how wages develop," wage commission Chairman Aadne Cappelen told a news conference.
Wage deals done last year through collective bargaining, a key measure, will have varying degrees of influence on pay increases in 2018, with forecasts for individual sectors ranging from 0.6 percent to 1.4 percent, and with manufacturing workers estimated at 1.1 percent, the commission said.
Core inflation, which excludes changes in taxes and energy prices, is expected to rise to 1.6 percent from 1.4 percent, but will still remain well below the central bank's long-term target of 2.5 percent, the wage commission predicted.
The central bank will publish updated forecasts for inflation, wages and interest rates on March 15.
"Our main impression is that this is neutral to Norges Bank's assessment. In the short term there is nothing in this report that should make the central bank change its view (on rates)," Handelsbanken economist Marius Gonsholt Hov said.
"All in all inflation, wage growth and the carry-over from last year are in line with the central bank's estimates," he added.
Despite a closely regulated bargaining system, however, Norway can see strikes annually in various industries and parts of the public sector.
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