Cost of living in Denmark so far avoids potential trade war effects

The annual rate of inflation in Denmark is currently at 1.5 percent, meaning average prices for consumers are 1.5 percent higher than they were 12 months previously, newly released figures from Statistics Denmark show.

While the data evidences a rise in prices over the last year, the relatively low figure combined with a stable trend from March, when inflation was also 1.5 percent, indicate that inflation is under control in the country, according to Palle Sørensen, chief economist at Nykredit.

“Today’s figures are further proof of [stable inflation]. It’s quite impressive, especially considering that they are still trying to bring inflation down south of the border,” Sørensen told news wire Ritzau, referencing inflation in Germany.

Rising rent has pushed inflation upwards in Denmark over the last year but falling energy prices have helped to offset the effect, he said.

“Energy has become cheaper. Electricity prices are down, which means direct savings for everyone in Denmark,” Allan Sørensen, chief economist at the Confederation of Danish Industry (Dansk Industri, DI), told RItzau.

Advertisement

“The price of oil has dropped by more than ten percent since the beginning of April, and that’s noticeable when filling up your car,” he added.

Nykredit is keeping a close eye on whether a potential trade war between the US and a number of other countries could eventually impact inflation in Denmark, Palle Sørensen said.

The situation may have had the opposite effect so far, pushing prices down, he noted.

“This is simply because fears of a global recession may have caused energy prices to plummet. That pushes prices downwards quite markedly overall,” he said.

Nykredit expects inflation to remain low in the coming years despite concerns about a trade war.

“Even though a trade war would raise the price of US goods, falling energy prices and weaker growth in both Europe and Asia would pull in the opposite direction,” Palle Sørensen stated.