RayVR 3 days ago

in Denmark, inflation is currently running at a 1.6% annualized rate, as of the most recent reading[0]. This is the full basket inflation rate, including volatile categories (food and energy). Core inflation is even lower, with the latest reading at 1.3% (annualized) in October 2024. Food inflation is, of course, volatile. It currently sits at a moderately elevated level of 3.9% (October 2024, annualized).

Food prices declined earlier this year for two consecutive months, though that will be a minor consolation after the significant food price inflation in 2022 and persisting, though at a slower pace, through 2023.

All of that to say, "let them eat cake" mentality is unlikely in a country where they have consistently ranked at the top of a world happiness index. Additionally, while I'm not well versed in Danish politics, I am under the impression that the Social Democrats have responded much better to the mass immigration that has been an ongoing issue for many parties throughout Europe. I think this is indicative of a party that adapts rather more quickly to the consequences of their previous policies and is less ideologically stubborn - at least on some issues.

0: https://ycharts.com/indicators/denmark_inflation_rate

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braincat31415 2 days ago

1.6% is the change in the CPI. The actual inflation is about 8%. There was a huge change in the CPI in 2022 or 2023, mostly attributed to sharply higher cost of energy.

RayVR 2 days ago

I don't think you understand the numbers I listed. Read what I wrote again and try to think about the parts you don't understand, look them up, then read again.

lowkey 3 days ago

Economists look at inflation on a month/month or year/year basis. This is not an accident as it purposely ignores the destructive cumulative effect of inflation.

Individuals, by contrast look at the cumulative effect of inflation. If inflation runs hot for several years and then comes back to a moderate level, prices don’t go down regardless of what economists would have you believe. The effect of inflation has memory.

RayVR 2 days ago

Economists look at inflation in many, many ways. I don't think anyone that's reasonably well informed, especially economists, misunderstands the cumulative impact of price changes.

Economists that make monetary policy decisions look at recent inflation trends + projected inflation because they are tasked with price stability, which requires them to often respond to shocks well outside their control (war in Ukraine, massive government spending, tax cuts, covid-19 pandemic, etc.)

I was trading and researching fixed income and inflation markets (and implementing in multi-billion dollar portfolios) years ago when you had inflationistas claiming the Fed was going to cause double digit runaway inflation. At the same time, you had people claiming the Fed was not doing enough to support markets.

No matter what monetary policy makers do, it will be pretty much universally mocked by pundits and especially anyone that wants to talk their own book.

Academic economists don't really focus much on any particular reading of inflation, unless perhaps they have their own axe to grind about how it is measured or responded to.

Monetary policy can't change the past, which is why they evaluate current and expected inflation, not what happened in two years ago. Just because prices increased dramatically in 2022 does not mean the Fed or any other central bank should aim for deflation.