Inflation in Denmark reached its highest level since 1983 in June, with food prices experiencing a significant jump this time, according to new figures released by Statistics Denmark.
Prices rose by 8.2% last year, with energy and food prices being the most affected when comparing price levels to last year's.
What is inflation?
Inflation is a sustained rise in the general price level; in other words, the price of goods and services generally rises, making money less valuable. The opposite development, where money becomes more valuable, is called deflation. Both inflation and deflation—if they are high—can have significant economic consequences for society. Central banks normally aim for inflation of around 21 TP3T per year, but over the past decade, prices in Denmark have risen at a slower pace, although this has changed in the last six months.
In May, total food prices were 10.6% higher than in the same month last year, but in June this figure rose to 13.6%.
For specific product groups such as eggs, milk, butter, beef and veal, prices have increased by more than 20% compared to last year.
The difference in monthly consumption
According to Brian Friis-Hilmer, an economist at Arbejdernes Landsbank, high inflation means that the average family with children needs to have up to 3,000 Danish kroner extra out of pocket each month to buy the same goods compared to last year. He notes that many will be able to take steps to cope with the significant price increases. For example, they could monitor supermarket promotions, use less energy at home, or take shorter showers to conserve resources. Jesse Asmussen, chief economist at Handelsbanken, calculates that rising prices cost the average family with children around 35,000 Danish kroner extra per year. Asmün adds, according to TV2, "The damage is unavoidable, and as prices continue to rise more sharply than wages, in our view, this will inevitably curb private consumption, which will help push the Danish economy into recession," as stated in an analysis based on the latest inflation figures.
