CPH Post


Inflation at a historic low

The yearly rise of consumer prices has reached its lowest rate in 60 years

While shopping became more expensive last month, prices are still historically low (Photo: Scanpix)

January 13, 2014

by AJ

Last month saw consumer prices rise by 0.8 percent over December 2012 – the second-largest jump of the year – but as a whole, inflation was at a historic low in 2013.

With prices rising just 0.8 percent from 2012 to 2013, it marked the lowest inflation rate in 60 years.

READ MORE: Low inflation and high consumer confidence

A drop in the price of food and petrol are among the explanations for the historically low inflation rate, according to Arbejdernes Landsbank chief economist Lone Kjærgaard. 

"It is partly due to  lower demand following the financial crisis and partly due to the fact that the prices of raw material, including petrol, dropped," she told financial daily Børsen. "But consumer prices also benefited from the many fees that were removed on food products in 2013."

Increased spending power
The low inflation increases help boost the spending power of consumers, and led to an increase in real wages. 

"Even though actual wages only rose by very little in 2013, the rise of consumer prices was far less. It means that Danes' real wages rose in 2013 compared to the last two years when wages decreased,” Kjærgaard said, adding that the low prices may last well into 2014.

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