Danish millennials pinched after inflation hits 37-year high

● Danish inflation is higher than millennials and younger adults have ever experienced in their lives.

After a decade of price increases clocking in at less than 2% a year, consumers are now having to contend with a whopping 5.4% gain in March from a year earlier — a level not seen since May 1985, when the internet was in its infancy and the Berlin Wall was still standing.

The young and less wealthy people will be affected the most and will probably have to get used to worse, said Bjorn Tangaa Sillemann, senior analyst at Danske Bank.

Danish inflation hasn’t peaked yet, spurred by high demand for the country’s goods and services abroad and continuing wage growth, he said.

“It’s a wake-up call for some that their incomes are no longer adequate and they will have years with no real wage growth,” he said. “The younger generations, who haven’t had entire careers to build fortunes and excess equity in their homes, are more exposed.”

Many will have to learn to get by with less discretionary spending, such as holidays, cars and fine dining, since prices on food products are rising as well, said Helge Pedersen, chief economist at Nordea Bank Abp.

On the other hand, there is room for house prices to fall, allowing more young people to enter the expensive housing market, he said.

Inflation is boosted by energy, as well as wage pressures stemming from labour shortages, after Denmark managed to dodge much of the pandemic’s economic fallout. Consumer sentiment has also been sapped by Russia’s invasion of Ukraine, dropping last month to the lowest level since the financial crisis of 2008.

Electricity contributed one percentage point of the annual increase in inflation last month, while fuel added about 0.8 percentage point, said Statistics Denmark.

“It’s absolutely crucial how much you drive a car and how you heat your home,” Sillemann said. —