Danish inflation likely to stay muted, may pick up significantly in February 2019

Danish inflation is likely to pick-up modestly in the future. The decrease in car taxes last year slipped out inflation in October and the drag from declining food prices should fade in the months ahead, noted Danske Bank in a research report. However, inflation is likely to stay muted over the coming year.

This is mainly due to the media licence is sliced by nearly 25 percent. This might impose a more considerable drag on inflation than was originally anticipated – nearly 0.25 percentage point.

“The weight is currently 1.14%, which looks very high to us, if you compare the revenue from the media licence with aggregate private consumption, but we have no reason to believe the weight should decrease by much in 2019 as it has been fairly steady in recent years”, stated Danske Bank.

The consumer price inflation is likely to pick up significantly in February, as last year’s record-low rent rise slips out of inflation, but this component of the CPI continues to be a big joker, and rent rises might tick in again in 2019.