Inflation in Denmark could average close to 7% this year

Denmark’s inflation outlook is deteriorating rapidly. With the EU announcing plans to wind down imports of Russian oil, higher-for-longer oil prices and soaring food costs has made us raise our inflation forecast to 6.7% from 5% previously. Reassuringly, high-frequency consumption data suggest that the drops in consumer confidence are not being reflected in activity.

What you will learn:

• Household spending is continuing to benefit from the last reopening tailwinds, with retail sales posting a rebound in April.
• Despite renewed disruption to supply chains, manufacturer delivery times rose at their slowest pace in more than a year in May.
• Despite higher government spending to mitigate the effect of rising energy prices on consumers, public finances should remain in surplus this year at 0.6% of GDP, down from 2.3% in 2021.