Up to six months can go by before the effects of lower inflation are reflected in everyday prices, an expert said on Monday after the national stats agency Statistics Denmark reported a drop in inflation had occurred in November compared to October.
“It will take up to half a year before we see an effect in the form falling food prices in shops,” Henning Otte Hansen, senior consultant with the University of Copenhagen’s Department of Food and Resource Economics told news wire Ritzau.
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A decline in electricity and gas prices experienced last month is one factor in the lower inflation in November, senior analyst Louise Aggerstrøm Hansen of Danske Bank said.
Energy prices have since begun to climb again, partly due to the onset of winter weather.
Raw foods may also be falling in price and helping to reduce inflation, according to Otte Hansen.
“We are seeing cheaper and cheaper agricultural raw products and that will also rub off on final food prices within a relatively short time,” he said.
“But a certain lag must be accounted for from when we get cheaper raw materials to getting cheaper foods,” he said.
However, increases to the price of some foods may begin to flatten out as soon as January, he said.
“But the underlying conditions in the form of cheaper agricultural raw materials, a good harvest in several parts of the world and cheaper transport are positive signs we will get cheaper foods,” he said.
Lower prices in the energy sector also have a knock-on impact on food prices, he noted.
Consumer rights organisation Forbrugerrådet Tænk said that it expects the price of food to drop in accordance with energy prices, but not immediately.
“Although general price increases have actually fallen quite markedly, the price of foods has still gone up by 0.5 percent and that means it will still get more expensive to shop at the supermarket,” the organisation’s senior economist Morten Bruun Pedersen said.
Pedersen sounded a more optimistic note than Otte Hansen, however, and said that some price drops could be seen by February.
Although inflation has taken a step backwards, it is still far higher than what would be considered a normal level for price increases year-on-year.
Inflation of around 1-2 percent has been around the normal level seen in recent years.
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