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Fast Comment DenmarkInflation ticks up for a second consecutive month

  1. Consumer prices rose 0.2 percent m-o-m in May - weaker than expected
  2. Annual inflation ticked up from 0.8 to 1.1 percent
  3. Inflation is still relatively low but should move up further
Consumer prices rose less than expected
Consumer prices rose 0.2 percent m-o-m in May, which was less than our expectation (0.5 percent). The largest monthly increase in gasoline prices since February 2015 added to the price gains, as expected, but food prices were flat against our expectation of a 0.4 percent m-o-m increase. The biggest culprit behind our miscalculation was however a drop in prices on package tours - perhaps driven by the exceptionally warm weather - where we had expected a rebound following a weak trend in latest months.
Annual inflation picks up
Following continued declines in annual consumer price inflation since September last year, it picked up in May for a second consecutive running. The increase from 0.8 percent y-o-y to 1.1 percent y-o-y in May was naturally also weaker than expected, but highlights that the extraordinarily weak trend in inflation at the beginning of this year is coming to an end. Again it was primarily higher energy prices that pushed inflation higher, but rents on vacation homes also contributed - perhaps also a consequence of the warm weather. Even though inflation has picked up for two months now, it is still relatively low also in comparison with developments in the eurozone, but we expect the tendency toward slightly larger gains in Danish consumer prices to continue over coming months.

Disclaimer

Jes Asmussen

Chief Economist Denmark

Denmark and The Netherlands

jeas01@handelsbanken.dk

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