Electricity prices drop in Denmark to help reduce inflation

Lower electricity prices are partly to thank for a reduced inflation rate in Denmark in December, a new index shows.

Electricity prices drop in Denmark to help reduce inflation
The price of electricity has fallen in Denmark since late 2022. Inflation is also showing signs it will decline this year. Photo: Bo Amstrup/Ritzau Scanpix

The index, which takes into account EU consumer prices, was released by national agency Statistics Denmark on Monday.

December’s figure for inflation in Denmark was calculated to be 9.6 percent, meaning consumer prices were 9.6 percent higher compared to 12 months prior. The figure in November was slightly lower at 9.7 percent.

READ ALSO: Inflation falls in Denmark for second consecutive month

Further evidence of falling inflation in Denmark is a welcome sign according to private economist Brian Friis Helmer of Arbejdernes Landsbank.

“But a sting in the tail is that the so-called ‘core inflation’ has increased form 6.9 percent to 7.4 percent in December,” Helmer told news wire Ritzau in a written comment.

Core inflation or kerneinflation is the inflation of prices excluding food and energy prices and is sometimes used by economists as a measure of how entrenched inflation has become.

“High core inflation shows that quite a broad cross section of Danes’ purchases is affected by high prices,” Helmer said.

The latest figures suggest that inflation will continue to fade towards the end of this year, a second analyst said.

“There are continued price drops for energy, raw materials and transport as well as higher interest and declining global demand. These will put a dampener on inflation during 2023,” senior economist Kristian Skriver of the Danish Chamber of Commerce stated in a written comment.

The EU-harmonised index shows that price increases are broadly falling across the 27 EU member countries, with 11.1 percent inflation in November dropping to 10.4 percent in December.

While falling electricity prices are a key component of Denmark’s lower inflation, it is cheaper gas that is helping to reduce prices more broadly.

READ ALSO: Low European gas prices ‘will benefit’ energy consumers in Denmark

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Denmark and Germany announce plans for hydrogen pipeline

Germany and Denmark will work together to construct a pipeline to transport hydrogen between the two countries, ministers announced on Friday.

Denmark and Germany announce plans for hydrogen pipeline

Danish climate minister Lars Aagaard and German counterpart, Minister for the Economy and Climate Robert Habeck, briefed press on Friday after signing a declaration which could see a hydrogen pipeline between the countries completed by 2028.

“A big thank you to Germany when it comes to questions of energy and climate,” Aagaard said.

“We have the same interests in so many areas. Today we are taking it one step further,” he continued.

The declaration means the countries will work on an underground hydrogen pipeline between the Danish region of West Jutland and northern Germany.

The agreement sets out the general framework for the plan and who will lead it, according to Danish news wire Ritzau.

A Danish-German partnership over a hydrogen pipeline can be seen in a broader context of the Danish government’s plans relating to Power-to-X technology.

Power-to-X is the process by which electricity and water are converted into hydrogen using electrolysis. The hydrogen which is produced can be used as fuel in a number of ways, including as power for ferries, trucks and industry.

An agreement passed by the Danish parliament last year aims to build electrolysis capacity in the Nordic country to 4-6 gigawatts by 2030.

Germany already uses a large amount of hydrogen in its industry and will eventually need to convert from fossil fuel-produced hydrogen to hydrogen produced from sustainable sources such as wind and solar.

Demand for hydrogen power in Denmark is currently more limited.