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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Russia summons German, Swedish and Danish envoys over Nord Stream

Russia on Thursday summoned the envoys of Germany, Sweden and Denmark over Moscow's frustration with the lack of progress on probes into the sabotaged Nord Stream gas pipelines.

Russia summons German, Swedish and Danish envoys over Nord Stream

Built to carry Russian gas to Germany, the pipelines in the Baltic Sea were ruptured by subsea explosives months after Russian President Vladimir Putin sent troops to Ukraine in February, 2022.

Western countries have blamed the explosions under the Baltic Sea last September on Russia, but the Kremlin has accused the West of sabotage.

German, Swedish and Danish authorities have been investigating the blasts that sparked four leaks.

On Thursday, the Russian foreign ministry said it summoned the envoys and made an official diplomatic protest over “a complete lack of results of the national investigations allegedly carried out by the authorities of these countries”.

Moscow decried the three EU nations for failing to “ensure the transparency” of the investigations and insisted that Russia should be involved in the probes.

The Russian foreign ministry also pointed to the three countries’ “lack of interest” in establishing the truth.

“They are clearly dragging their heels and trying to conceal the traces and the true perpetrators of the crime,” the ministry said in a statement.

In March, the UN Security Council rejected a Moscow-drafted resolution calling for an independent inquiry into the sabotage.