Belgian inflation, the rate at which prices in the shops are going up, fell to 0.36% in October. Figures from the Belgian statistics office show inflation at its lowest level since January 2021. The fall is mainly due to lower energy prices. Take energy out of the equation and inflation still stands at 6.55%.
“It’s good news” says Peter Vanden Houte, chief economist at ING Bank. “It shows the surge in inflation that we experienced last year is ebbing away. Families are seeing increased spending power thanks to the automatic index-linked pay increases last year and pay rises this year. When prices now fall, spending power increases”.
The fall is being fuelled by negative energy inflation: Energy prices have been falling since February. Last month energy prices fell 37.15% on average.
“Natural gas prices are 77% lower than last year. Electricity prices are over 50% lower. This lowered overall inflation” explains Vanden Houte.
Food prices continue to rise strongly, though food inflation does seem to be slowing. Food inflation still stands at 9%. The price of olive oil and potatoes rose most sharply: they are 25% more expensive than a year ago. Hotels and rolling tobacco too increased significantly.
Peter Vanden Houte : “The European Central Bank has an inflation target of 2%. Due to the sharp fall in energy prices we are now getting very low inflation. It’s quite possible it could even turn negative though by the end of the year Belgian inflation of 3% or 4% is expected”.
Despite near zero inflation the latest figure will trigger a 2% top-up increase in public sector wages and benefits. This is explained by the fact that no account of petrol and diesel prices is taken when calculating the health index used to decide the index.