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Danish inflation continues upward trend in latest figures

Price levels in Denmark continued to rise in August, according to data released on Monday by official agency Statistics Denmark.

Danish inflation continues upward trend in latest figures
Food prices are contributing to Denmark's overall record inflation figures. Photo: Ida Guldbæk Arentsen/Ritzau Scanpix

Last month saw prices 8.9 percent higher than they were 12 months prior, an increase on the inflation level of 8.7 percent measured in July, the agency said.

The figure also represents the highest 12-month increase in prices since 1983.

Broken down into product groups, categories central to household finances remain among those to have seen the steepest price hikes.

Food, electricity and gas provide the largest contributions to the inflation figure.

READ ALSO: How much will Danish energy bills go up this winter?

The price of food and non-alcoholic drinks was 15.9 percent higher in August than it was in August 2021.

Consumer economist Louise Aggerstrøm Hansen of Danske Bank noted that despite the latest inflation increases, prices had not risen as much month-to-month as they earlier this year.

However, food prices normally fall in August, she also noted. The price of milk, cheese and eggs remains around 25 percent above last year’s prices.

Future trends on the prices of consumer goods are becoming increasingly difficult to predict although additional inflation is likely, senior economist Jeppe Juul Borre of Arbejdernes Landsbank told news wire Ritzau in a comment.

“Energy prices are jumping and dancing and are currently helping define the direction of inflation,” he said.

“There is additional an outlook of broad price increases for Danes whereby many companies increase their prices in the near future,” he said.

An inflation level of 10 percent in the coming months is not out of the question, he said.

Hansen also said the situation was more likely to worsen before improving.

“Fundamentally, the inflation problem comes from consumers having too much to spend while there have been supply problems across the globe,” she said in a written comment to Ritzau.

“It is taking a long time to increase supply, so the cure for inflation is that we must get poorer. As we automatically will be when prices increases undermine our spending power, unless incomes also go up,” she said.

The European Central Bank last week increased its interest rate in an anti-inflation measure, with Denmark’s central Nationalbank following suit shorty afterwards.

READ ALSO: What does ‘historic’ interest rate hike mean for Denmark?

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How will Nord Stream pipeline leaks affect gas bills in Denmark?

Gas prices increased on Wednesday morning in the wake of gas leaks from the Baltic Sea Nord Stream pipelines and Russian threats to close off remaining gas supplies to Europe.

How will Nord Stream pipeline leaks affect gas bills in Denmark?

The stock market price of gas rose from 15 kroner per cubic metre on Tuesday morning to 18 kroner per cubic metre on Wednesday, according to energy analyst Kristian Rune Poulsen of Green Power Denmark.

“The gas leaks in the Baltic Sea have made the market nervous and prices increase by 5-10 percent in the wake of that,” Poulsen told news wire Ritzau.

“But on top of that, [Russian state gas monopoly] Gazprom has threatened to shut off supplies to Europe through Ukraine and that has made the price of gas go up even more,” he said.

The two Nord Stream gas pipelines linking Russia and Europe were hit by unexplained leaks, Scandinavian authorities said on Tuesday, raising suspicions of sabotage.

The three gas leaks on the Nord Stream 1 and 2 pipelines were visible Tuesday in waters off Denmark with huge areas of bubbling spreading from 200 to 1,000 metres in diameter, the Danish military said.

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The leaks occurred off the Danish island of Bornholm in Danish and Swedish economic zones, but in international waters.

“The Nord Stream pipelines were already inoperative for an indefinite amount of time, so the reaction on the market has been limited,” Poulsen said.

Russia is still sending some gas to Europe – around one-fifth of pre-war levels, the analyst said.

If Gazprom follows up on its threat to shut off another pipeline – which travels through Ukraine – the remaining amount would be halved, he said.

“That would hit the sparse supplies we actually have,” he said.

Gas prices are still some way from a peak on August 26th, when the price reached 30 kroner per cubic metre.

“Since August 26th, the trend has in fact been downwards, and the price was roughly halved [compared to the August peak] up to yesterday,” Poulsen said.

Consumers who use gas to heat their homes in Denmark will nevertheless feel the impact of Wednesday’s price hike, however.

“Consumers cannot follow gas prices hour by hour like with electricity prices,” Poulsen said.

“If the price is high, their gas bills will also go up. But they will not see that until three months from now when the next heating bill comes,” he said.

The analyst said he expects gas prices to remain high at around 20 kroner per cubic metre throughout the winter, and even during the following winter.

“The next two winters look like they will be very expensive if you use gas,” he said.

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