Inflation in Belgium rises to highest level in 40 years

Inflation in Belgium rose further this month to 8.31 percent, compared to 8.04 percent in February. This is what the Statbel statistics office reports.

The inflation rate remains at the highest level since March 1983. At that time it was 8.92 percent. The indicator for price increases has risen mainly as a result of the sharp increase in energy prices. The core inflation rate, which does not take into account the price development of energy products and unprocessed food, is 3.75%. Food is now 4.63 percent more expensive than a year ago. For services, the price increase is 3.78 percent.

The price increases for energy products are the most spectacular. Electricity is now 49.9 percent more expensive than one year ago, natural gas 148.8 percent more expensive. Motor fuels cost 31.3 percent more than one year ago. Compared to last month, the price of electricity has fallen by an average of 11.7 percent due to a temporary VAT reduction. Natural gas became 4.8 percent more expensive but will get the same VAT reduction next month. 

Most Belgians are to some extent protected against the effects of inflation. If prices rise to a level exceeding the central index, wages automatically rise along with them. Within Europe, this same automatic indexation exists only in Malta, Cyprus and Luxembourg. Elsewhere, wage increases are always the result of negotiations between trade unions, employees and company managers.

Several Belgian employers' organisations have long questioned the central index system. The National Bank has calculated that wage costs will rise by almost 13 percent (or some 20 billion euros) by the end of 2024. In the meantime, there is a risk that the wage-price spiral will lead companies to raise their prices, causing inflation to rise again.

© BELGA PHOTO NICOLAS MAETERLINCK