Danmarks Satistik announced that consumer confidence has hit minus 25.6 for July – the lowest number since records began.
This therefore marks the third consecutive month of historically low consumer confidence in Denmark. According to Kristian Skriver from Dansk Erhverv, diminished purchasing power is largely to blame.
“The historically high price increases hurt the Danes’ wallets, and therefore cause major economic frowns for Danish consumers,” she said to TV2. “In addition, the war in Ukraine has increased consumers’ economic insecurity.”
As a result, consumers are cutting back on groceries, electricity, heating, and eating out in restaurants, according to a Megafonmåling survey.
End in sight?
Luckily, some predict that purchasing power may be restored to some degree in the coming months.
“We see some trends in financial markets that give hope that high inflation is starting to normalize, so we can get back to the two percent inflation that we do not have to worry about,” said Danske Bank’s chief analyst Jens Nærvig Pedersen.
However, given that Denmark’s consumer price index recently rose to its highest point since 1983, other experts stress that it will take time for consumers to see prices completely return to normal.
“Consumer prices will change, but it will only be by small percentages at a time,” said Mintec’s Tom Bundgaard. “So, it’s not like you can go out and buy a whole lot more tomorrow. But in two years, the consumer will notice that prices are back to a normal level.”
Denmark is one of many countries presently struggling with high inflation in the wake of COVID-19 and Russia’s invasion of Ukraine.
