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(Bloomberg) — Norway’s inflation slowed last month more than expected, reducing the room for bets the central bank will need to opt for a stronger and longer interest-rate tightening, and prices in Denmark showed a similar trajectory.

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Norway’s headline inflation rate declined on year to 6.3% in February, versus the median projection of 6.8% in a Bloomberg poll of analysts that was the same as the central bank’s estimate. Underlying inflation, the measure followed by Norges Bank, also declined from an all-time high to 5.9%, matching the central bank’s view, while analysts had expected a smaller slowdown.

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Cost of living increases have remained near three-decade highs in the energy-rich Nordic nation, with economic activity holding up better than expected, even as Norges Bank was the first among the G-10 group of major currency holders to raise borrowing costs after the pandemic. 

A weaker-than-expected krone and more aggressive hikes by the European Central Bank and the Federal Reserve have also added speculation that policymakers will need to return to half-point hikes in the benchmark rate already on March 23. The Nordic region’s largest lender, Nordea Bank Abp, sees Norges Bank delivering a full percentage point of additional tightening by autumn from 3% now.

Prices for transport and food still drove the annual price increases, while clothing and education contributed most to the slowdown, the statistics office in Oslo said on Friday.

In Denmark, the inflation rate fell for a fourth month in a row, the longest downward streak since 2019, according to the national statistics office. Consumer prices rose 7.6% in February from a year earlier, compared with a rate of 7.7% a month before and down from a four-decade peak of 10.1% in October.

—With assistance from Joel Rinneby and Harumi Ichikura.