Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
High price level contributes to lower inflation in Denmark than in the euro area
Although inflation in the euro area anchors Danish consumer prices in the long term, they have fallen relative to the euro area since the introduction of the euro and especially in the years after 2013. The analysis argues that this reflects price convergence linked to the higher price level in Denmark and more moderate wage increases than in the euro area after the financial crisis. Inflation differences due to converging price levels are a natural adjustment and are not a symptom of an economic imbalance.
Key messages
Why is it important?
As Denmark's central bank, one of Danmarks Nationalbank's most important tasks is to contribute to stable prices. This analysis examines why inflation in Denmark is often lower than in the euro area despite the fixed exchange rate policy.
Main chart
Several prices contribute to lower inflation in Denmark than in the euro area
Note:
Contribution to the average difference between annual HICP inflation in Denmark and the euro area from different price categories in 2013-2024.
Source:
Macrobond, Eurostat and own calculations.