Denmark proposed to spend an extra 2.3 billion kroner ($340 million) on inflation aid, mainly targeting senior citizens.
The government will now start talks with opposition parties in parliament to reach a broad deal and decide on the details, Finance Minister Nicolai Wammen told reporters in Copenhagen on Monday.
Consumers in Denmark have been hit heavily by accelerating inflation and higher interest rates, which are curbing spending. The Danish central bank — which doesn’t have an inflation target but whose main mandate is to defend the krone’s peg to the euro — has identified rising prices as the biggest threat to the AAA-rated economy.
Denmark’s inflation rate peaked at a four-decade high of 10.1% in October, but has since edged down to 8.7%.
Prime Minister Mette Frederiksen’s previous cabinet adopted inflation-aid packages totaling 10 billion kroner last year, including a one-time energy subsidy for low-income Danes, a cap on rent and a reduction in electricity fees. When she formed a new cabinet last month, she pledged to introduce new inflation aid in 2023. Wammen said he expects to reach a political deal within a few weeks and that the aid will be “fully financed.”