In September Danish consumer prices rose by 0.3% on the month earlier, driving up annual inflation to 0.5% after the historical low of 0.4% in August. Over the past month, the CPI was mainly lifted by price increases of clothing and footwear.
Inflation bottomed in August
We believe that the past year’s falling inflation trend culminated in August and that inflation will again edge higher towards the end of the year. One of the reasons is that some of the base effects of notably energy, which have pulled inflation lower over the past year, are starting to drop out of the calculations of the year-on-year inflation rate. At the same time we predict that the past six months’ rapidly declining price increases of food have now come to an end and will no longer contribute to driving inflation lower.
Slightly rising consumer prices towards 2015
However, according to our model inflation will not rise dramatically; we expect it to reach about 1% by the end of the year. If so, average inflation for 2013 will land on a modest 0.9% – the lowest level since 1958. In 2014 we look for an increase in average inflation to 1.3%, while consumer prices are forecast to increase by 1.7% in 2015.
Nordea