Food and energy prices rocket as Danish inflation hits 40-year high

Prices for consumers have increased in Denmark by 6.7 percent across the last 12 months.

Danish supermarket prices
Danish supermarket prices have jumped in the last 12 months. File photo: Signe Goldmann/Ritzau Scanpix

The costs paid by consumers in Denmark last month were 6.7 percent higher than prices in April 2021, according to new data released by national agency Statistics Denmark on Tuesday.

The 6.7 percent increase is the largest jump in prices since 1984.

Electricity, fuel, gas and food are the goods categories pulling that figure upwards the most, meaning the prices of these are likely to have increased even more than the average.

Spiralling prices are now beginning to have a real effect on household finances, an analyst said.

“Ouch, this is really hurting the wallets of Danes. We are talking about the biggest price rises since 1984,” senior economist with Arbejdernes Landsbank, Jeppe Juul Borre, told news wire Ritzau in a written comment.

“Calculated in kroner, a family with children must now spend around 30,000 kroner more to maintain the same annual consumption as a year ago. That is a seriously big chunk into a family’s household budget,” he said.

“Inflation is no longer something primarily only talked about, but something Danes actually feel when grocery shopping,” he said.

Sub-groups of products are more affected by inflation than others, meaning the price increases will not have an even impact, according to Danske Bank consumer economist Louise Aggerstrøm Hansen.

Food has increased in price by 7.7 percent when comparing April 2021 to last month.

There are also signs of prices beginning to increase in other products and services categories.

Although external factors such as the Russian invasion of Ukraine and high energy costs are a large part of the explanation for inflation in Denmark, there are also signs of a broader trend, Hansen told Ritzau.

“If we peel off energy, unprocessed foods and taxes to measure the level in the economy of prices not directly imported by global conditions or tax increases, we land on 3.6 percent,” she said.

“That is very high and now beats the record from 2008, just before the economy collapsed following a massive overheating,” she stated in an analysis.

Despite the apparently concerning situation, Danske Bank says it expects inflation to have peaked in April.

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Danish government returns debt payments from 138,000 people 

Around 138,000 people in Denmark have been unable to repay debts to the Danish state in 2022 after money they paid was refunded.

Danish government returns debt payments from 138,000 people 

From January to October 2022, 138,000 people in Denmark trying to square their debts with the government were refused due to confusion about whether the Danish Debt Collection Agency (Gældsstyrelsen) actually has the right to receive it, newspaper Berlingske reports.

Having a debt to the Danish public sector on your books can have serious financial consequences, including jeopardizing your eligibility to secure a mortgage.

Data from the Debt Collection Agency indicate the number of debts considered “not ready for recovery” has increased by 1.5 million this year. Half of those debts are connected to the Danish Tax Authority (Skattestyrelsen). 

In total, the 138,000 people were refunded 121 million kroner, including 17 million kroner in unpaid interest. That works out at an average refund of 750 kroner per person.

Based on the scale of the problem, the government will have to consider cancelling some of the debts, Peter Bjerre Mortensen, professor of public administration at Aarhus University, tells Berlingske. 

“They need to swallow some very big camels and/or simplify some legislation or forgive some debts, because right now it seems that things are still going the wrong way with regard to collecting public debt,” Mortensen said. 

The issues with ‘unpayable’ debts first arose in 2015 when EFI, the IT system Skat used to collect debt, was shuttered, according to Berlingske.

Debts to the Danish state have been growing since then. The parliamentary ombudsman said earlier this week that he would try to find out why individuals have been unable to repay debts.

“The ombudsman has received complaints from several members of the public and there have been articles in the media about people who could not repay their debt to the state,” wrote the ombudsman, Niels Fenger.

Tax minister Jeppe Bruus has previously recognised the issue with the repayment system.

“This is a huge challenge and something that must be worked on and improved,” he told newspaper Jyllands-Posten in September.

READ MORE: ‘Topskat’: What is Denmark’s high income tax bracket?