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Fast Comment DenmarkHoliday houses and package tours drove up consumer prices

  1. Consumer prices rose 0.8% m-o-m in July - more than expected (0.5%)
  2. Package tours, food prices and rents on holiday were the primary reasons for the upside surprise
  3. Annual inflation was unchanged at 1.1%
Consumer prices rose more than expected
Consumer prices increased by 0.8% m-o-m in July, which was more than we had expected (0.5%). The surprise on the upside was mainly driven by larger-than-expected increases in prices on package tours and rents on holiday houses, but food prices also rose more than expected. We had expected increases in rents on holiday houses, which normally soars in July, but the increase was nonetheless larger than we had expected; maybe the fantastic summer weather had a role to play. The nice weather did not however have any impact on prices on package tours, which otherwise might have been suspected, with the seasonal increase in July being actually larger than normal.
Unchanged annual inflation
Despite the large monthly increase, annual consumer price inflation stayed unchanged at 1.1% in July, we had expected a fall to 0.8%. The unchanged reading is due to base effects from an even larger increase in food prices in July last year, but a drop in prices on district heating also led to a lower annual price increase in the heavy housing component. The upshot is that inflationary pressures in the Danish economy still remain relatively muted. Moving forward, we do expect inflation to pick up gradually as the labour market tightens and spare capacity dwindles, but for now it is hard to see any significant danger of a marked erosion of consumers' purchasing power from the development in consumer prices.


Jes Asmussen

Chief Economist Denmark


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