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How much will rising prices cost Danish families each month?

The cost of living crisis in Europe – and Denmark – is far from over. According to a new estimate, Danish families could end up paying several thousand kroner extra each month in 2023 due to rising prices.

The high levels of inflation in the Danish economy in 2022 could continue into the following year. Photo by Eduardo Soares / Unsplash

The high inflation levels that have plagued the Danish economy in 2022 could spill over into the next year.

At least that’s what Camilla Schjølin Poulsen, an economist at PFA Pension, the largest privately owned life insurance company in the country, believes.

Compared to 2021, a typical Danish family has had to find an extra 4,000 kroner in their monthly budget in order to keep up with higher expenses for heating, electricity, petrol, food, and other day-to-day items this year, TV 2 reports.

The monthly toll of inflation in 2023

According to a calculation from PFA, in 2023, a Danish family will need to find 6,000 kroner more per month if they are to continue to keep up with price growth.

“With the inflation that the central bank and De Økonomiske Vismænd institution expect, it is not unrealistic that a typical Danish family should expect to pay an additional 2,000 kroner every month. So, a total of 6,000 kroner more for everyday items compared to the price level in 2021,” the PFA calculation states.

The calculation is based on an average family of four with a car that runs on petrol and a detached house heated with natural gas.

According to the PFA, those living in a home connected to the district heating network have seen a less extensive increase in their bill in the past year.

Overall inflation

The PFA states that inflation in Denmark has amounted to approximately eight percent over the whole of 2022.

The country’s central bank believes it will end up at four percent next year, while the De Økonomiske Vismænd institution expects it to amount to 5.1 percent.

In times not characterized by crises, inflation tends to be between one and two percent per year.

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Cheaper electricity on the way for 2.5 million Danish customers

Electricity customers in eastern parts of Denmark will soon see their bills reduced after energy grid operators agreed to reduce their tariffs from March 1st.

Cheaper electricity on the way for 2.5 million Danish customers

Two energy grid companies, Cerius and Radius Elnet, are to reduce their tariffs from March 1st. The two companies operate on Zealand and the smaller islands Lolland, Falster and Møn.

Tariffs were increased at the turn of the year because the companies said they had a backlog of additional costs from last year that they wished to trim.

Money raised from tariffs goes toward the cost of maintaining the electric grid and transporting energy to consumers.

An electricity bill accounts for tariffs, the raw electricity price, VAT and other taxes.

The average tariff for customers in Radius’s area — Copenhagen, North Zealand and parts of Central Zealand — should drop by 18 percent from March, while the rest of Zealand will see their tariffs fall an average of 20 percent. 

READ ALSO: Danish regulator says  electricity companies earn ‘excessive’ profits

“It was very sad in the autumn when we had to announce price increases but with the sudden high increases to the cost of electricity, there was no way around it,” head of operations Cäthe Juul Bay-Smidt of Cerius and Radius Elnet said.

“But as we clearly said at the time, and as we have said since, we intended to reduce prices again as soon as we saw a longer-term trend towards lower prices. That’s what we’re seeing now,” she said.

“And that means we will have lower costs and then we can put our prices down,” she said.

As many as 2.5 million customers on Zealand, Lolland, Falster, Møn and outlying smaller islands could feel the benefit of the lower tariffs.

A third energy grid company, Trefor, is also reported to be considering reducing tariffs. Trefor operates in the trekantsområde or “triangle region” encompassing areas in and around the towns of Vejle, Kolding and Fredericia.

No final decision has been taken by Trefor so far.

“We have considerations about hopefully being able to reduce prices around the time of the summer holiday. I don’t expect to be able to do it earlier,” director of infrastructure Charles Nielsen told news wire Ritzau.

“That is because we have a relatively large debt from last year and previous years that must be cut back,” he said.