Per cent 25  25 Non-financial corporate sector  20  20  15  15 Households  10  10  5  5 House prices  0 1998  0 1999  2000  2001  2002  Sources: Norwegian Association of Real Estate Agents, EFF, FINN.no, ECON EF, ECON and Norges Bank SG Gausdal 31.01.03  The sharp rise in electricity prices may lead to lower growth in consumption this year. Higher electricity expenses reduce household purchasing power. Many enterprises will also be facing higher costs. On the other hand, high electricity prices generate revenues for central and local government. Electricity prices 1 January 1998 = 100 340  340  300  300 260 220  Spot prices incl. tax and grid rental  180  260 220  Electricity prices index in the CPI*  180 140  140  100  100 *Electricity (including grid rental) accounts for 3.3% of CPI  60 Jan 00  60 Jul 00  Jan 01  Jul 01  Jan 02  Jul 02  Jan 03  Sources: Statistics Norway, NordPool, Viken Energi and Norges Bank SG Gausdal 31.01.03  Higher electricity prices will result in a sharp increase in the consumer price index this winter. The year-on-year rate of increase in the consumer price index may approach 4 per cent in January and February. Underlying inflation will also be affected. For example, this can be the result of higher rents and higher costs in some business sectors.
In Norges Bank’s assessment, the outlook for the internationally exposed sector is brighter today than a year ago because the rise in costs has slowed markedly. As mentioned earlier, the decrease in wage growth has been of great importance in enabling us to reduce the key rate towards an international level. We expect inflation to pick up in the first half of 2004. Output and employment will probably grow somewhat more than trend. Again, thank you for giving me the opportunity to deliver this statement. 6  BIS Review 53/2003