Has Denmark’s record price inflation peaked?

Consumer prices have climbed 8.7 percent since July 2021, according to figures from the government agency Statistics Denmark.

Has Denmark’s record price inflation peaked?
Danish customers are paying considerably more for food than they were 12 months ago- File photo: Liselotte Sabroe/Ritzau Scanpix

An 8.7 percent increase in prices in Denmark represents the highest rate of inflation the country has experienced since 1983.

It is also 0.5 percent higher than the inflation level recorded in June.

Inflation is measured as a corrected average of price increases over a one-year period for product groups including food, energy, restaurant visits and clothes.

Skyrocketing prices for food, electricity, and fuel are driving the change to price indices.

Food and non-alcoholic drinks were 14,6 percent more expensive in July than they were 12 months prior. The category for milk, cheese and eggs has seen a 24.5 percent increase in price over the last year.

“Today’s numbers are equivalent to an average family having to pay 5,300 kroner more for their monthly consumption compared to a year ago,” Danske Bank’s senior economist Lars Olsen said in a written comment.

“Even if you account for wage increases during that time, there is still a fall in living standards of 3,200 kroner per month,” he said.

But there could soon be an end to the discouraging numbers and spiralling prices, according to another analyst.

“If our prognosis is correct, inflation will peak during the late summer and will gradually increase towards the turn of the year,” said Tore Stramer, lead economist with the Danish Chamber of Commerce (Dansk Erhverv).

“And then in 2023 – hopefully before we reach the summer – we will have inflation back at two to three percent, which is a more normal level,” he said.

That prediction is subject to uncertainty, Stramer stressed. Inflation has previously confounded expectations and has increased by more than predicted in recent months.

“If we get new increases in energy prices and the cost of raw materials, we can’t rule out inflation becoming stuck at the current high level for longer than expected,” he said.

Danske Bank’s Olsen also said he expect inflation to trend downwards in the latter months of 2022.

But it will be “a long time before we are down at normal inflation levels”, he said.

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’Record number’ of foreigners move to Denmark for work

A record number of people moved to Denmark from abroad for work reasons in 2022, according to national agency Statistics Denmark.

’Record number’ of foreigners move to Denmark for work

A total of 31,600 people moved to Denmark to work last yer, according to a Statistics Denmark review released on Tuesday.

The figure corresponds to a 24 percent increase compared to 2021 and is the highest in the history of the statistic, which goes back to 1997.

The average number of work immigrants in the decade prior to 2022 was 21,000 people.

Specifically, the number describes the amount of people who were given work permits in Denmark in a given year.

The fact that the statistic has reached a historical high is remarkable, according to an economist.

“In a time with a major labour shortage, Danish businesses have succeeded in recruiting labour from abroad. That is a big success story, which certainly ensures growth and stability in the Danish economy in the period after the coronavirus pandemic,” senior economist Tore Stramer of the Danish Chamber of Commerce told news wire Ritzau.

“The large inflow of foreign labour has held of a threatening overheating of the labour market and ensured stable high growth in the economy,” he said.

READ ALSO: Danish parliament set to vote through relaxed work permit rules

Broken down by nationality, the largest proportion of people moving to Denmark to work came from EU countries in Eastern Europe.

Some 6,000 Romanian nationals were granted Danish work permits in 2022, with 3,700 coming from Poland.

Employment levels in Denmark continue to set records, confounding an uncertain economic outlook and high inflation.

READ ALSO: Danish economy defies headwinds to grow by 3.6 percent

Foreign labour is a driving factor for high employment levels, Stramer said.

“The large inflow of foreign labour has been the absolute primary factor behind the strong rise in employment in recent years,” he said.

“Specifically, foreign labour has driven around 40 percent of the overall increase in employment over the last three years,” he said.