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MONEY

Danish prices in ‘biggest jump since 2008’

The price of everyday goods in Denmark increased by 4.2 percent over the 12 months prior to January this year, the largest hike in a one-year period since 2008.

A Danish shopping basket
A Danish shopping basket costs considerably more than it did a year ago. File photo: Thomas Lekfeldt/Ritzau Scanpix

The measure from agency Statistics Denmark shows inflation is at its highest since 2008, when prices in Denmark went up by 4.4 percent over a year during the Global Financial Crisis.

Prior to 2008, the largest 12-month value for inflation was in 1989.

Energy price increases are the biggest culprit for the high level of inflation in 2022.

Electricity, petrol and gas have all become more expensive over the last year and account for 2.4 percent of the overall inflation.

However, very few categories of goods have become cheaper during the last 12 months. According to Statistics Denmark’s consumer index, alcohol, tobacco, clothing and communication are the only product groups to have gone down in price, having a negative effect on the overall inflation rate.

A family in Denmark with two adults and two children must pay 18,600 kroner more for the same goods and services in 2022 compared to the beginning of 2021, an analyst said.

“Inflation is hurting Danish people’s wallets. Inflation has accelerated in recent months and prices have taken a noticeable jump upwards,” Niklas Praefke, senior economist with trade union Ledernes Hovedorganisation, told news wire Ritzau.

“That means we need to get more money out of our pockets when we are shopping and when we pay electricity and heating bills,” he added in a written comment.

The economist said he expected inflation to remain above 3 percent in the coming months.

It is, however, expected to eventually fall off as energy prices are unlikely to continue to drive inflation upwards.

“The drop (in inflation) will probably not be very big because the large shortage of both labour and materials will continue to put pressure on companies’ overheads,” Praefke said.

“Overall, I expect inflation in a year’s time will be lower than it is today,” he said.

READ ALSO: Denmark could give tax-free sum to families with high heating bills

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ENERGY

Denmark to reduce electricity tax in 2022 and 2023

A majority in the Danish parliament has agreed to reduce the amount of tax charged on electricity, beginning this year.

Denmark to reduce electricity tax in 2022 and 2023

The deal was presented on Friday in the form of a political agreement between enough parties to vote it through parliament.

The reduced electricity tax, which will be temporary, is expected to cost the Danish state 475 million kroner and is part of a wider deal which aims to compensate the public for increasing living costs.

Tax on electricity will be eased by 4 øre per kilowatt hour for the last three months of 2022 (1 øre is one hundredth of a krone), and by 4.3 øre per kilowatt hour in 2023.

As such, the electricity tax rate will be 72.3 øre per kilowatt hour for the last quarter of 2022, and 68.8 øre per kilowatt hour throughout 2023.

Electricity taxes were already scheduled for reduction under the terms of a 2018 political agreement.

Prior to Friday’s agreement, the plan was for electricity tax to fall from 76.3 øre per kilowatt hour in 2022 to 63.9 øre per kilowatt hour in 2025.

The temporary cuts announced on Friday are separate from that deal and mean that the tax will be lower than planned in 2023, but will rise at the beginning of 2024.

Friday’s agreement also includes provisions to increase tax subsidies for people in employment and to give a one-off lump sum of 5,000 kroner to elderly people who receive the ældrecheck welfare benefit.

The overall cost to the state of the deal is 3.1 billion kroner.

Parties from both sides of the political aisle have pledged to back the agreement in parliament. They include the Socialist People’s Party (SF), the Red Green Alliance, Social Liberals (Radikale Venstre), Conservative and Liberal parties along with the Social Democratic government.

The increasing cost of energy is cited in the agreement as the primary reason for the necessity of the deal.

The Danish Chamber of Commerce praised the political agreement in comments to news wire Ritzau.

“A reduced electricity tax means both consumers and businesses get an incentive to switch to green electricity,” the interest organisation’s director Brian Mikkelsen said.

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