Could high costs for Danish producers be passed on to customers?

Overheads at Danish businesses are currently increasing sharply due in no small part to high energy prices.

Overheads for Danish companies appear to be increasing dramatically, which could result in broader price hikes.
Overheads for Danish companies appear to be increasing dramatically, which could result in broader price hikes. File photo: Signe Goldmann/Ritzau Scanpix

An index for the costs to companies of raw materials, energy and transport went up by 33 percent in December 2021 compared to the same month in 2020, according to new data from Statisics Denmark.

The figure is remarkably high and suggests that consumers could eventually feel its effects in the form of higher prices, an analyst said to news wire Ritzau.

The energy sector has already warned about drastic increases to heating bills for many homes in Denmark.

READ ALSO: Why some homes in Denmark are more affected by rocketing heating bills

“These are completely dizzying numbers that go completely through the roof. Such drastic increases have never been recorded before,” Jeppe Juul Borre, senior economist with Arbejdernes Landsbank, told Ritzau.

“The working day for businesses has quite simply become much more expensive and that is something that Danish consumers are also going to feel the effects of. Inflation has already gone up to its highest in 13 years,” Borre said.

“This reflects that possible broader price increases can be on the way for Danes, whereby a large portion of the consumer sector can be affected,” he said in a written comment.

But another financial institution’s senior economist, Palle Sørensen of Nykredit, said that high production costs might not drastically break through to create a general price increase across the board.

Sørensen noted previous studies which found that a 1 percent increase in production costs only results in a 0.01 increase to inflation.

“When overheads increase for businesses, this will to a certain extant seep through to prices (for customers),” he said.

“But if you look at the whole shopping basket, the amount that breaks through is relatively limited,” he said.

The most recent consumer index for Denmark, taking into account products and services, showed a price increase of a little over 2 percent in December 2021 compared to the previous year.

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Denmark and three other EU nations want to increase North Sea wind power tenfold by 2050

EU members Germany, Denmark, the Netherlands and Belgium on Wednesday said they wanted to increase their North Sea wind power capacity tenfold by 2050 to help the bloc achieve its climate goals and avoid Russian hydrocarbons.

Denmark and three other EU nations want to increase North Sea wind power tenfold by 2050

Danish Prime Minister Mette Frederiksen said the plan would mean the four countries would “deliver more than half of all offshore wind needed to reach climate neutrality in the European Union”.

The increase would make the North Sea “the green power plant of Europe”, she told a news conference in the port of Esbjerg in western Denmark.

“Setting a vision is not enough, we will make it happen,” Frederiksen added, flanked by German Chancellor Olaf Scholz, EU chief Ursula von der Leyen, Dutch premier Mark Rutte and Belgian leader Alexander De Croo.

The countries’ goal is to raise wind power capacity fourfold to 65 gigawatts by 2030 and then tenfold to almost 150 gigawatts by 2050.

They said 150 gigawatts of offshore wind power would supply 230 million homes with electricity.

Such a capacity would amount to 15,000-20,000 wind turbines, based on the most powerful ones currently on the market.

The announcement comes as the European Commission presented a plan to accelerate the development of renewable energy worth 210 billion euros ($220 billion) to reduce the bloc’s dependence on Russian gas as quickly as possible.

The European Union has already said it will end imports of Russian coal by August.

An embargo on Russian oil as part of a sixth sanctions package against Moscow for its invasion of Ukraine is proving more contentious after Hungary raised objections.

The commission has said it wants to reduce purchases of Russian gas by two-thirds this year and completely before 2030.

On Wednesday it proposed to increase the proportion of renewable energies in the bloc’s energy mix from 40 percent to 45 percent by 2030.

The 27-nation EU aims to reduce greenhouse gas emissions by at least 55 percent by 2030 and achieve carbon neutrality by 2050.

READ ALSO: Danish offshore wind could help Europe ditch fossil fuels