PUBLISHED June 28, 2026
According to Statistics Norway’s (SSB) June 2026 Economic Trends report, Norway faces a prolonged period of above-target inflation driven by the Middle East conflict and continued high wage growth, making a further interest rate hike from Norges Bank all but inevitable before the end of the year. GDP growth is expected to hold at a near-normal pace, but the housing market remains depressed and borrowing costs are set to stay elevated well into 2027.
Inflation Still Well Above Target
Domestic inflation is being maintained at a high level by increased costs, both in Norway and abroad. This year’s wage settlement concluded with a norm of 4.4 per cent. At the same time, higher prices for energy and commodities are reflected in inflation among our trading partners. According to SSB researcher Thomas von Brasch, it will take time for inflation to come down to the 2 percent target given elevated wage growth and rising global prices. The CPI is forecast at 3.2 percent for 2026, before gradually easing to around 2 percent by 2029.
Another Rate Hike Expected — Possibly Imminently
Norges Bank reduced the key interest rate by 0.5 percentage point in 2025. Following unexpectedly high inflation in early 2026, Norges Bank announced in March that the interest rate would probably be raised. In May the key policy rate was increased to 4.25 per cent. SSB’s forecast makes no secret of what comes next: a further hike is expected before the end of 2026. The money market rate is projected to average 4.5 percent for the year, before gradually declining to 3.8 percent by 2029 as inflation comes under control.
Housing Investment Remains Depressed
Housing investment remained at a low level throughout 2025 after falling by around 25 per cent throughout 2023 and 2024. Investment fell slightly in Q1 this year. The most recent figures for sales of new dwellings and for housing starts do not suggest any increase in residential construction in the near future. Higher interest rates and high construction costs are creating a demanding situation for both home buyers and developers. SSB projects housing investment will remain virtually flat throughout 2026 before picking up modestly in 2027. House prices are expected to rise around 4 percent in both 2026 and 2027, though with wide regional variation.
According to the Labour Force Survey, the unemployed accounted for 4.7 per cent of the labour force in 2026 Q1. The increase follows a decline in unemployment throughout the second half of 2025. Concurrently, unemployment registered by the Norwegian Labour and Welfare Administration has been fairly stable, with the fully unemployed representing about 2.1 per cent of the labour force since May 2025. SSB forecasts the LFS unemployment rate will remain around 4.4–4.6 percent over the coming years before gradually easing toward 4.2 percent in 2029 as employment growth continues.
According to the Labour Force Survey, the unemployed accounted for 4.7 per cent of the labour force in 2026 Q1. The increase follows a decline in unemployment throughout the second half of 2025. Concurrently, unemployment registered by the Norwegian Labour and Welfare Administration has been fairly stable, with the fully unemployed representing about 2.1 per cent of the labour force since May 2025. SSB forecasts the LFS unemployment rate will remain around 4.4–4.6 percent over the coming years before gradually easing toward 4.2 percent in 2029 as employment growth continues.
Growth in the Norwegian economy declined from the middle of 2025 and throughout Q1 this year, following a pronounced upswing from mid-2024. Both private and public consumption are expected to contribute markedly to growth going forward. Household consumption is being boosted by continued real wage growth, while fiscal scope for manoeuvre provides latitude for high public demand. Mainland GDP growth is forecast at 1.7 percent for 2026 and 2.0 percent for 2027 — broadly in line with the historical average. Annual real wage growth of around 1 percent is projected throughout the forecast period.
As a result of the conflict in the Middle East, Norway’s trading partners are experiencing stronger inflation. Higher energy and commodity prices are increasing costs to households and businesses. This is pushing up inflation among Norway’s trading partners, particularly in Europe. The inflation projection for the euro area has been revised up to 3.1 per cent for 2026. Inflation is then expected to abate and lie close to the European Central Bank’s target of 2 per cent. Annual GDP growth among Norway’s trading partners is forecast at 1.5 percent in 2026, rising toward the long-term average of 2 percent by 2029.
SSB’s forecast assumes an average crude oil price of $89 per barrel (Brent) for 2026 — a significant step up from $68 in 2025 — reflecting the Strait of Hormuz disruption. Prices are expected to decline gradually to $74 per barrel by 2029 as energy markets normalize. This elevated oil price is a double-edged factor for Norway: it supports the country’s export revenues and sovereign wealth fund but simultaneously fuels domestic inflation through higher energy and commodity costs, complicating the task of returning inflation to target.
Growth in the Norwegian economy declined from the middle of 2025 and throughout Q1 this year, following a pronounced upswing from mid-2024. Both private and public consumption are expected to contribute markedly to growth going forward. Household consumption is being boosted by continued real wage growth, while fiscal scope for manoeuvre provides latitude for high public demand. Mainland GDP growth is forecast at 1.7 percent for 2026 and 2.0 percent for 2027 — broadly in line with the historical average. Annual real wage growth of around 1 percent is projected throughout the forecast period.
As a result of the conflict in the Middle East, Norway’s trading partners are experiencing stronger inflation. Higher energy and commodity prices are increasing costs to households and businesses. This is pushing up inflation among Norway’s trading partners, particularly in Europe. The inflation projection for the euro area has been revised up to 3.1 per cent for 2026. Inflation is then expected to abate and lie close to the European Central Bank’s target of 2 per cent. Annual GDP growth among Norway’s trading partners is forecast at 1.5 percent in 2026, rising toward the long-term average of 2 percent by 2029.
SSB’s forecast assumes an average crude oil price of $89 per barrel (Brent) for 2026 — a significant step up from $68 in 2025 — reflecting the Strait of Hormuz disruption. Prices are expected to decline gradually to $74 per barrel by 2029 as energy markets normalize. This elevated oil price is a double-edged factor for Norway: it supports the country’s export revenues and sovereign wealth fund but simultaneously fuels domestic inflation through higher energy and commodity costs, complicating the task of returning inflation to target.
