The National Bank of Denmark published an analysis on inflation and price developments examining why food and non-alcoholic beverage prices have risen sharply and how this is feeding into Danish inflation. It finds prices in this category have increased by 32 per cent since 2021, around twice the rise in the overall net price index, and attributes recent increases primarily to supply-side pressures in global markets rather than stronger domestic demand. Food and non-alcoholic beverages account for around 12 per cent of the overall net price index, but in August 2025 they made up nearly half of the increase in overall inflation, and the analysis notes that frequent purchases can also raise households’ perceived inflation, with low-income households more exposed. Since the start of 2024, the food category has risen by about 8 per cent versus 2.7 per cent for the overall consumer price index, with particularly large increases in coffee (33 per cent over the past year), chocolate (15 per cent) and beef and veal (22 per cent); in August 2025, these three categories accounted for nearly half of inflation within food and non-alcoholic beverages, when the category rose by 5.9 per cent year on year. The report links these moves to constrained supply amid post-pandemic uncertainty, the war in Ukraine, trade conflicts and climate-related extreme weather, including a shrinking cattle herd in the US and Europe, weather-related pressure on coffee production in Brazil, and disease, adverse weather and weaker investment affecting West African cocoa production; model results suggest a 1 per cent increase in beef and veal commodity prices typically lifts related consumer price inflation by 0.6 per cent after about 8–12 months, with faster and stronger pass-through for very large price rises. Commodity futures and international outlooks are cited as pointing to continued high prices in the short term, even as coffee and cocoa production is expected to recover gradually in 2025/26 if conditions remain favourable; climate change is highlighted as increasing the risk of more frequent price spikes and volatility. The analysis also compares Danish trends with the euro area given Denmark’s fixed exchange rate policy.
National Bank of Denmark 2025-09-24
National Bank of Denmark analysis finds food prices up 32% since 2021 and driven mainly by global supply shocks
The National Bank of Denmark's analysis highlights a 32% rise in food and non-alcoholic beverage prices since 2021, driven by global supply-side pressures. These items, accounting for 12% of the net price index, contributed nearly half of the inflation increase in August 2025, with significant hikes in coffee, chocolate, and beef. The report attributes these trends to post-pandemic uncertainty, the war in Ukraine, and climate issues, with commodity futures indicating continued high prices short term.