National Bank warns of wage-fueled inflation

Recent wage increases, the highest in years, continue to push inflation, according to a new forecast by the Danish National Bank. National bank director Christian Kettel Thomsen highlighted that higher wages, especially in the service sectors, contribute to inflation due to significant labor demands. The bank predicts that this inflationary pressure will persist in the coming years, with inflation expected to reach 2.2% in 2024, rise to 2.6% in 2025, and then decrease to 1.7% thereafter. Denmark’s inflation was recorded at 0.6% in February, but the National Bank anticipates an increase towards the end of the year. Wages are likely to increase by over 5% until early 2025, driven by negotiations in the private labor market. Service prices are particularly affected due to the relatively high labor requirements. Danske Bank’s chief economist, Las Olsen, agrees with the upward trend but expects a slightly milder impact.