PHOTO
FILE PHOTO: A helicopter patrols off Tromsoe, Norway, June 2, 2012. REUTERS/Saul Loeb/Pool/File Photo
Norway's core inflation rate continued to rise in June hitting a fresh record, Statistics Norway (SSB) data showed on Monday, boosting the probability that interest rates will continue to rise and pushing up the value of the country's currency.
Core inflation, which strips out changing energy prices and taxes, rose 7.0% year on year, up from 6.7% in May and exceeding the 6.6% average forecast from analysts polled by Reuters.
Higher food prices, especially for fruit and vegetables, was the most important factor behind the increase, which is unusual for June and could be related to a weakened crown currency, SSB said.
The central bank, which aims for core inflation of 2.0% in the medium term, had predicted that inflation would only rise to 6.6% in June.
It said last month it aims for another hike in August, predicting the rate would rise to 4.25% during the autumn from the current 3.75%.
"In isolation, this points to faster rate increases from Norges Bank than what was signalled at the June meeting, but we believe they will stick to their plan," Nordea economist Dane Cekov said in a note.
Norway's crown currency strengthened to 11.61 against the euro by 06:33 GMT from 11.68 ahead of the 0600 GMT data release. (Reporting by Victoria Klesty; editing by Jason Neely)