Inflation, the figure reflecting the general rise in prices, stands at 3.4 % this month. The figure is lower than in the past two months, largely due to an agreement in principle between the US and Iran: oil prices have fallen back, and fuel prices have followed suit.
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Scaled down top-up for wages and benefits as inflation slows to 3.4% in June
Colin Clapson
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In April and May, inflation rose above 4%, fuelled by the war in the Middle East and resulting in high energy prices. However, in June, the US and Iran reached an agreement in principle to negotiate a peace deal, and this appears to have significantly stabilised oil prices.
Motor fuel prices usually react quickly to such a fall, and this is reflected in the inflation figures. Motor fuels became 6.4% cheaper on average in June.
Significant price falls were also seen this month compared with last month for airfares (down 21.6% on average), holiday villages and campsites (down 6.2%) and clothing (down 1.1%).
The most notable price rises in June were for electricity (+2.5%) and natural gas (+1.5%). Rented accommodation became 0.7% more expensive and package holidays rose in price by an average of 0.%.
Core inflation threshold exceeded
As expected, the latest inflation figure means public sector workers, some private sector employees and people on benefit will receive a top-up in September.
Normally, the top-up would be 2%, but as a result of austerity measures introduced by the De Wever I government the top-up will not apply to gross wages above 4,000 euros. The same applies to social security benefits above 2,000 euros. This is the first of two planned top-up holidays.
In the private sector, too, many workers will feel austerity in their pay packet this summer: including workers in the metal and banking sectors.