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Denmark’s headline inflation recovers slightly in October

Danish inflation recovered slightly in October after falling sharply in the prior month. The headline inflation accelerated to 0.8 percent year-on-year from 0.6 percent. In spite of the rise, the inflation is still unusually low compared to the euro area.

On a sequential basis, the consumer price index rose 0.3 percent in the month. The rise was widespread with Transport and Recreation & Culture contributing the highest to the headline print, lifted mainly by prices of air travel in connection with the autumn holiday in October.

On a year-on-year basis, Housing and Transport mainly contributed to the headline rate. These two categories account for over 0.7 percentage points of the total rise in year-on-year inflation. Meanwhile, lower food prices continue to contribute negatively. Nevertheless, with the poor harvest in several nations including Denmark, food prices are likely to move higher again in coming months.

In spite of the small rise in October, the spread between inflation in Denmark and the Euro area is still unusually large. This is mainly because of very large differences in Transport and Food.

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