Wage and Inflation Dynamics in Denmark

Download or read book Wage and Inflation Dynamics in Denmark written by Raju Huidrom and published by International Monetary Fund. This book was released on 2023-07-19 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Nominal wage growth in Denmark has so far been modest and outpaced by high inflation, putting real wage growth in negative territory. Amid still-tight labor markets, this has raised concerns about wage pressures going forward and the eventual impact on inflation. The analysis suggests that wage formation in Denmark has historically been partly backward-looking, and economic slack also has played a role. Given these, high inflation realized thus far and the tightness in the labor market implies that wage pressures are expected to remain elevated in the near term. Some of these wage pressures, in turn, are expected to be passed on to core inflation, sustaining high inflation. Thus, determined policies to fight inflation are important.