Data from national agency Statistics Denmark show that consumer prices in May were 7.4 percent higher than they were a year previously, in May 2021. That is the highest 12-month inflation recorded since 1983.
The figure shows that inflation is still on the rise in Denmark, with the 12-month increase for April having stood at 6.7 percent.
Higher prices for electricity, energy and food are the main drivers for escalating inflation figures.
Removal of energy and raw foods from calculations of inflation gives a core inflation of 4.4 percent, a lower value but nevertheless still the highest since 1989.
An average household budget for a family with two children is now 30,000 kroner more per year compared to a year ago, according to Mathias Dollerup Sproegel, senior economist with Sydbank.
Although wages are also increasing – the first quarter of 2022 saw the highest level for wage increases for 13 years – these are not enough to offset inflation.
“The Danish economy is therefore facing some challenging months and quarters in which it will be decisive whether consumers decide to take a hit on their savings to maintain spending power,” Sproegel said.
“The worst case scenario is a bumpy landing for the economy, although we are inclined towards a softer landing,” he added in a written comment.
The senior economist with the Danish Chamber of Commerce, Tore Stramer, said that inflation should peak this summer before declining.
“The speed at which inflation declines is, however, uncertain and depends upon factors including future development of energy prices,” Stramer said.
“But as things look at the moment, there’s reason to hope that inflation will soon peak and that in 2023 we will reach a more leisurely inflation level of around 2-3 percent,” he commented.
The lead economist also noted that people in Denmark are, in general, relatively well equipped to manage a period of high inflation.