Danish inflation decelerates in August, likely to rise gradually in mid-autumn

Inflation in Denmark slows in August from the previous month. It accelerated 0.2 percent year-on-year in August, 0.1 percentage point lower than in July. It was also lower than the consensus expectations of 0.5 percent. Core inflation decelerated to 0.6 percent year-on-year from 0.9 percent year-on-year. The lower inflation in August is likely to be a temporary setback as waning impacts from oil prices would begin to push inflation higher in months to come, said Nordea Bank in a research report.

Communication prices in August fell 10.5 percent year-on-year, negatively contributed 0.23 percentage points to the overall consumer price index. Meanwhile, lower oil price continues to exert a downward pressure on the inflation numbers. Petrol and diesel prices declined about 5 percent year-on-year in August, hence subtracting 0.26 percentage points from the overall consumer price index.

Meanwhile, rents on summer houses and on housing contributed positively to the year-on-year figure. Danish inflation is expected to move higher gradually in mid-autumn as the base effects from the lower oil prices would wane.

“We expect Danish inflation to reach close to 1.0 percent at end-2016”, added Nordea Bank.