Inflation in Belgium has fallen sharply to 2.39% in September – down from 4.09% last month – which is the lowest level in over two years.
At 2.39%, the inflation rate – which reflects the cost of living – is now approaching the the European Central Bank's (ECB) 2% target, the Federal Economy Ministry announced in a press release.
"After two years we are finally back where we need to be, with normal inflation. This is very good and important news," announced Economics Professor Stijn Baert (UGent). "Inflation of 2.4% means that what cost €100 a year ago now costs a good €102."
With this "normal" inflation rate, there is a "sufficient increase" in the cost of living for the economy to continue to function as it guarantees that people will not postpone purchases, but it is not too high so that money does not lose value too quickly.
"The main explanation is that food prices finally seem to be under control. Last month, food became 2.3% cheaper," Baert said. "We often see a decline in September due to major promotions, but it is larger than expected and than in the past and [therefore] appears to be partly structural."
Core inflation (which does not take into account the price evolution of energy products and unprocessed foods, for example) still stands at 6.95%. Structurally, this means that life is still becoming much more expensive.
The fact that inflation has now fallen so sharply is mainly due to the high energy prices a year ago; energy was on average almost 30% more expensive last year than it is currently.
The most important price increases in September concerned alcoholic drinks, motor fuels, foreign travel and city trips. Bread and grains (-3.6%), fruit (-4.3%), vegetables (-3.9%) and sugar, jam, honey, chocolate and sweets (-10.9%) all became cheaper. Prices of airline tickets (-23.3%), hotels and similar services (-13.1%), natural gas (-10.1%), and IT equipment (-7.3%) also decreased.
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Notably, the so-called 'pivot index' (the point at which price rises automatically trigger wage hikes) will not be exceeded this month, contrary to what the Federal Planning Bureau had predicted.
"The Planning Bureau had expected inflation of over 3% this month. The fact that we are at around 2% is therefore a major stroke of luck," Baert said.
This means that the automatic increase in wages and benefits will be postponed for a while. The last time the central index was exceeded was in November 2022.
