Danish inflation accelerates in June on increased services prices

Denmark’s inflation accelerated 0.3 percent year-on-year in June, coming in above consensus projection of 0.2 percent. Meanwhile, core inflation rose 0.8 percent in the month, mainly due to increased prices on services. Prices on services accelerated 2 percent in June, which is the highest year-on-year rise since January 2014.

Hotel and restaurants prices rose 2.9 percent in June, contributing 0.2 percentage points to the overall consumer price index inflation. Moreover, housing and miscellaneous goods and services majorly contributed positively to the overall inflation.

Meanwhile, negative base effects from lower price continued to contribute negatively to the headline rate. Transport subtracted 0.29 percent from the year-on-year CPI print in June.

Inflation in Denmark is likely to continue to accelerate in the months ahead as the base effects from the lower oil prices begin to wane, noted Nordea Bank in a research report. Assuming that oil prices continue to hover around USD 50 per barrel, inflation in Denmark is likely to surpass 1 percent by the end of this year, added Nordea Bank.