Norway's consumer price inflation remained steady at 3.1 percent for 2025, matching the previous year's rate according to new data from Statistics Norway (SSB). The headline figure masks a significant divergence between soaring service costs and more moderate goods inflation, creating a complex economic picture for households and policymakers in Oslo. While real wage growth provided a buffer for many, experts warn that families spending heavily on food faced a much sharper cost-of-living squeeze.
Espen Kristiansen, a senior SSB official, described the year's outcome for workers as positive. "There was a fairly solid real wage growth in 2025, so a good year for Norwegian wage earners," Kristiansen said. This growth occurred because average wage increases across the economy outpaced the 3.1 percent rise in the Consumer Price Index (CPI). The data suggests collective bargaining agreements and a tight labor market succeeded in preserving purchasing power for the median worker, a key goal for both trade unions and the government.
The Service Sector Squeeze
A deeper look at the SSB numbers reveals the engine of inflation. Prices for services climbed 3.6 percent over the year, significantly higher than the 2.5 percent increase for goods. This trend reflects broader global and domestic pressures. Service inflation is often driven by rising labor costs, which are sticky and difficult to reverse. Sectors like hospitality, personal care, and transportation saw notable price hikes. In contrast, goods inflation, influenced by global supply chains and commodity prices, showed more moderation. This divergence presents a challenge for Norges Bank, Norway's central bank, as service price trends are a critical factor in its interest rate decisions.
The persistence of service-led inflation suggests underlying domestic economic heat. It indicates businesses are passing higher wage costs onto consumers, a cycle the central bank monitors closely. For households, it means essential services—from haircuts to public transport fares—are taking a larger bite out of monthly budgets. This structural shift in inflation sources may require longer-term policy responses beyond short-term interest rate adjustments.
The Grocery Bill Shock
Despite the positive real wage story, many Norwegians felt a distinct pinch at the checkout counter. Food and drink prices surged 5.7 percent in 2025, nearly double the overall inflation rate. This spike represents a severe burden for low and middle-income families, who allocate a larger share of their income to groceries. "It is unusually high in a historical perspective," Kristiansen noted. "Households that spend a lot of their money on food will experience that their cost of living has increased more than the 3.1 percent."
This grocery inflation has multiple causes. Global factors like climate-related crop shortages and elevated transport costs played a role. Domestic factors, including the weak Norwegian krone which made imports more expensive, also contributed. The concentration of the retail market among a few major chains is a perennial topic of political debate when food prices rise sharply. Storting members from opposition parties have repeatedly called for investigations into supermarket pricing power, arguing competition is insufficient to protect consumers.
Real Wages: A Cushion with Cracks
The 3.1 percent inflation figure, while unchanged from 2024, interacts with wage growth to create varied outcomes across the population. For a worker receiving a 5 percent annual pay increase, real purchasing power grew by nearly 2 percent. This scenario played out for many in the public sector and unionized industries where annual negotiations are robust. However, the benefit was unevenly distributed. Part-time workers, those in sectors with weaker bargaining positions, and pensioners relying on state benefits adjusted below inflation saw their real incomes stagnate or decline.
The real wage growth provides crucial breathing room for the center-left government led by Prime Minister Jonas Gahr Støre. It helps deflect criticism that the economy is failing ordinary people. Yet, the dramatic rise in food prices undermines this narrative for many families. The disparity creates a political challenge: how to celebrate broad economic stability while addressing the acute pain felt in everyday shopping. Government ministers often highlight strong employment figures and wage growth, but opposition leaders focus on the supermarket receipt as the true measure of economic health.
Policy Implications and the Road Ahead
The steady inflation rate of 3.1 percent, while above Norges Bank's 2 percent target, provides a measure of predictability. Financial markets had anticipated this level, meaning the data is unlikely to trigger an immediate shift in monetary policy. However, the composition of inflation—stubborn service costs and high food prices—will keep the central bank vigilant. Governor Ida Wolden Bache and her team have emphasized that sustained service inflation is a primary concern for achieving their target over time.
Fiscal policy also comes into play. The government's substantial spending from the Oil Fund, formally known as the Government Pension Fund Global, injects billions into the domestic economy. This spending stimulates demand, which can fuel inflation if the economy is already operating near capacity. Storting debates frequently center on whether the government's fiscal stance is appropriately calibrated or if it is working at cross-purposes with the central bank's efforts to cool inflation. The Conservative Party and Progress Party often argue for tighter fiscal policy to support monetary tightening.
Looking to 2026, the key questions will be whether service inflation begins to ease and if food prices moderate. Much depends on global commodity markets, the strength of the krone, and domestic wage settlements in the upcoming bargaining rounds. Another year of food inflation near 6 percent would intensify political pressure for direct intervention, such as tax cuts on essential items or stricter competition enforcement. The SSB data, while showing aggregate stability, reveals an economy where the experience of inflation varies dramatically between the boardroom and the kitchen table. For Norwegian policymakers, managing these divergent realities will be the central economic task of the coming year.