Market Views, Macro | Higher Interest Rates to Moderate Consumption Growth
Improved purchasing power among Norwegian households has contributed to a significant rebound in retail consumption. While positive real wage growth is expected to continue supporting consumption going forward, higher interest rates are likely to act as a moderating factor.
After a period of weakened purchasing power, Norwegian households have over the past two years experienced a recovery, driven by strong wage growth and easing consumer price inflation. Although inflation is expected to increase going forward—partly as a consequence of the conflict in Iran—real wage growth is still expected to remain positive in the coming years.
The improvement in purchasing power has supported growth in private consumption, particularly in retail spending. Looking at retail sales, growth has shown a steady improvement since 2022, and throughout 2025 it remained above pre-pandemic averages. While real wage growth is expected to remain positive in the period ahead, interest rates are also anticipated to increase, which will likely dampen consumption growth.
The expected increase in interest rates reflects continued cost pressures in the Norwegian economy, driven in part by high wage growth. This was already evident prior to the escalation of conflict in the Middle East. Higher prices for energy, fertilisers and transportation could contribute to further inflationary pressure going forward. Norges Bank has already raised interest rates once and has signalled the possibility of an additional rate hike this year, before initiating rate cuts next year. Market pricing suggests that the central bank may need to increase rates up to two more times this year.
Forventningene om høyere rente har allerede slått ut i svakere konsumenttillit, ifølge Finans Norge. Husholdningene har blitt mer pessimistiske og har revidert ned sine innkjøpsplaner. Vi har også observert at detaljomsetningen har svekket seg de to siste månedene.
Positiv reallønnsvekst vil trolig bidra til å støtte opp om konsumet framover, mens renteoppgang vil bidra motsatt vei. Alt i alt, antar vi at konsumveksten vil bremse i år sammenliknet med i fjor. I sin siste prognose fra mars i år har Norges Bank lagt til grunn at veksten i samlet konsum bremser opp det nærmeste året og holder seg moderat også i de påfølgende 2-3 årene.
