Denmark’s inflation remains zero in April, likely to accelerate higher in coming months

In April, Denmark’s inflation gauged month-on-month and year-on-year remained unchanged from March’s figure. Danish inflation continues to be zero for the second consecutive month and is just a little more than the historical low of -0.1% y/y registered in January 2015. Meanwhile, core inflation came in at 0.4%, continuing its downtrend.

Danish low inflation is mainly due to lower oil price. Even if gasoline prices were up by a tad last month, transport negatively contributed 0.30 percentage points to the year-on-year CPI numbers. Furthermore communication, and clothing and footwear also contributed negatively to the overall inflation print by 0.08 percentage points and 0.18 percentage points respectively.

Meanwhile, miscellaneous goods and services positively contributed 0.21 percentage points to overall inflation. But core inflation still slowed to 0.4% in April from March’s 0.5%. Inflation in Denmark is likely to accelerate higher in the following months as base effects from the lower oil prices begin to fade away, according to Nordea Bank.

“Under the assumption that oil prices will increase to around USD 50 at the end of 2016, we expect Danish inflation to exceed 1.0% at end-2016”, said Nordea Bank.