Danish inflation slows down for third consecutive month in January, likely to reach 1.2 pct in 2018

Denmark’s inflation decelerated for the third straight month in January. Danish consumer price inflation slowed 0.3 percent sequentially in January, mainly due to decreased prices on clothing and footwear that negatively contributed 0.4 percentage points. Moreover, furnishing and housing and transport weighed on the headline figure in January. Meanwhile, increased prices on alcoholic beverages and electricity added to the headline figure in the month.

On a year-on-year basis, consumer price inflation decelerated to 0.7 percent from 1 percent. This year-on-year rate was mainly driven by housing and food and non-alcoholic beverages. Recreation and culture negatively contributed 0.06 percentage points, as compared with its positive contribution of over 0.10 percentage points in the prior month.

According to a Nordea Bank research report, Danish inflation is expected to have an uptrend going forward to reach 1.2 percent this year. This rise is likely to be partially driven by a higher contribution from rents and partially by upward pressure from commodity prices. Moreover, the labor market is likely to contribute to a great extent to inflation.

“In 2019 inflation should continue to move higher, with an average year-over-year rate of inflation of 1.5 percent”, added Nordea Bank.

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