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When will reduced inflation in Denmark mean lower food prices?

Inflation in Denmark was lower in November than in October, the first time since 2021 that the figure has fallen from the preceding month. But experts warn that this may not be apparent in prices paid by consumers.

When will reduced inflation in Denmark mean lower food prices?
Inflation is down in Denmark, but supermarket prices are still up for the time being. Photo: Ida Guldbæk Arentsen/Ritzau Scanpix

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.

READ ALSO: Inflation down in Denmark but forecasts tentative for 2023

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.

READ ALSO: EXPLAINED: What’s causing the highest inflation rate in Denmark for 40 years?

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Will Danish farming emissions tax mean more expensive meat?

Denmark’s government has reached an agreement with the agricultural and conservation sectors that is likely to see an emissions tax on farming. Will it affect the price of meat?

Will Danish farming emissions tax mean more expensive meat?

Why is Denmark introducing an emissions tax on agriculture? 

The government has announced an agreement with interest organisations for both agriculture and nature conservation, which is likely to see the introduction of a world-first CO2 emissions tax on farming.

The agreement, which has been months in the making, would make Denmark the first country in the world to impose an emissions tax on its agriculture sector.

Various groups have agreed that the agriculture industry will, from 2030, pay a tax of 300 kroner per ton on its CO2 emissions. The tax will rise to 750 kroner in 2035.

A Danish CO2 agriculture tax has long been the goal of the coalition government but has faced resistance from farmers and from some opposition parties, as well as from interest organisations for the sector.

With the agreement, Denmark can meet its target of a 70 percent reduction in emissions by 2030, Tax Minister Jeppe Bruus said at the briefing.

“This is the last political agreement needed for us to reach our 70 percent target in 2030. It’s a landmark,” he said.

A combination of a tax on livestock, reduction of fertiliser use, reforestation and extraction of carbon-rich low-lying soils will reduce emissions, the government says.

Its implementation is likely but not certain: Parliament has begun its summer recess, meaning the government, which has a wafer-thin majority, must wait until autumn to table the necessary bill to pass the agreement into law. It is expected to try to persuade opposition parties to back the deal to give it a stronger majority.

READ ALSO: Denmark announces agreement on landmark CO2 tax for agriculture

Will it affect the price of meat? 

The short answer is ‘yes’, going by comments given by Minister for Economic Affairs Stephanie Lose to national broadcaster DR.

A price rise of 1 krone per packet of minced beef can be expected as a consequence of the agreement, Lose said.

That comes despite Prime Minister Mette Frederiksen saying during the 2022 general election campaign – when the CO2 tax was a prominent topic – that Danes should not pay extra for their shopping as a result of such a tax.

“A single mother with three children who play football makes spaghetti bolognese. I don’t want to place extra taxes on what I consider completely normal food products,” Frederiksen said at the time.

Lose said she was aware of the PM’s comments from two years ago but that the cost increase was a small price to pay for the landmark deal.

“In 2030, a packet of minced beef will cost 1 krone more for 500 grams in the supermarket,” the minister said to DR.

“I think that 1 krone reflects that we are now taking some huge decisions that will make a difference for Danish climate, for our nature and for our aquatic environments,” she said.

She also referred to tax cuts implemented by the current government which gave “completely normal Danes more cash in hand”.

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