The Federal Planning Bureau (FPB) predicts that inflation in Belgium will surpass the next indexation threshold in January of next year, which would mean a boost for social benefits and public sector wages between February and March.
The FPB has published its latest inflation forecasts this week, projecting out till the end of 2025 using Statbel data up to August 2024.
Credit: Federal Planning Bureau
Consumer price inflation should average 3.2% in 2024, falling to 1.9% in 2025, according to the FPB forecast. This would be much lower than 4.06% in 2023 and 9.59% in 2022.
Belgian and global inflation skyrocketed in 2022, as a rebound of demand after the lockdowns coincided with supply chain disruption and the energy crisis triggered by the Russian invasion of Ukraine.
Threshold for wage and benefit boost
Inflation according to the "health price index" (a four-month average which is used as the basis for indexation of pensions, social security benefits and some salaries and wages) is predicted by the FPB to be 3.3% in 2024, and 2.1% in 2025. This compares to 4.33% in 2023 and 9.25% in 2022.
When the health price index surpasses a certain threshold, it results in automatic rises in social benefits and public sector wages to keep pace with the rising cost of living. The last time the pivotal index was exceeded was in April of this year.
The FPB predicts that the next pivotal index marker (130.67) will be reached in January 2025, meaning social benefits should be increased by 2% in February, and public sector wages raised in March.
Apart from wages, the FPB predicts the price of oil should average 81 dollars per barrel in 2024, and 74 dollars per barrel in 2025. It adds that the exchange rate of the euro should be 1.09 dollar per euro in 2024 and 1.13 dollar per euro in 2025.
The FPB will give its next inflation forecast at the beginning of October.
