• Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) stood at 3.8% in March compared to 3.6% in February and 1.5% in January.
• Core inflation (inflation without energy and unprocessed food) stood at 3.9% in March compared to 4.1% in February.
• The inflation rate based on the consumer price index (CPI) for March remains stable at 3.2% as in February.
• The sub-indices with the largest upward effect on inflation were natural gas, tobacco, domestic heating oil, restaurants and cafés, private rents and the maintenance and repair of vehicles.
• The sub-indices with the largest downward effect on inflation were electricity, dairy products and electrical household appliances.
• The harmonised index of consumer prices of March for the EU Member States will be published by Eurostat on 17 April.

The inflation rate based on the European harmonised index of consumer prices (HICP)^[1] stood at 3.8% in March compared to 3.6% in February and 1.5% in January. Inflation based on the harmonised index of consumer prices at constant tax rates (HICP-CT)^[2] was running at 1.2% in March, compared to 1.0% in February. The difference in inflation between the HICP and the HICP-CT is largely due to higher excise duties on cigarettes, tobacco, electricity, gas and motor fuels. Indeed, these modifications to taxation are not taken into account in the HICP-CT.

Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stood at 3.9% in March, compared to 4.1% in February and 5.0% in January. Inflation without energy decreased to 3.8% in March, compared to 4.1% in February and 5.1% in January.

Food inflation now stands at 1.8% compared to 3.3% the previous month. In the spring of 2022, this inflation began to rise sharply, reaching a peak of 20.3% in March 2023. Since March 2023, it has been gradually decreasing. Inflation for oils, fish, dairy products, bread and cereals and meat has sharply increased until March 2023, but has been declining since then. Inflation for oils stands this month at 2.1%. In March 2023, it was still 31.3%. For dairy products, inflation is now -1.4% compared to 31.0% in March 2023. Fish registers this month an inflation rate of 1.4%. In March 2023, it was still 17.2%. For bread and cereals, inflation stands at 1.6% this month compared to 22.0% in March 2023. Inflation for meat amounts to 3.7% this month compared to 16.8% in March 2023.

Most of the decrease in inflation can be associated with lower energy prices. The contribution of energy to inflation has been negative since January 2023 until February 2024 and has now stabilised at 0.5%. As described below, the energy inflation increases. This is not an increase in the energy cost, but a consequence of the extinction of the 12-month impact of the basic packages in the index. Food products provide a contribution of 0.3%.

Electricity is now 14.9% less expensive than a year ago. Natural gas is 29.0% more expensive on an annual basis. Domestic heating oil prices have gone up by 22.8% compared to last year.

Inflation and effect on inflation for the 12 main groups

Based on the breakdown into 12 main groups, the highest inflation rate in March was measured for “Alcoholic beverages and tobacco” (10.3%). The lowest inflation rate was measured for “Interior decoration and household appliances” (1.8%). The main group with the largest upward effect on inflation in March was “Alcoholic beverages and tobacco” with an effect of 0.3 percentage points. The largest downward effect was measured for “Food and non-alcoholic beverages” (-0.4 percentage points).

Inflation^[3] and effect^[4] on inflation for the overall HICP and 12 main groups

Inflation according to specific aggregates

The overall HICP can be broken down into five specific aggregates which together form the total expenditure.

• Inflation for energy products increased compared to the previous month. In March, it amounted to 4.5% compared to -0.2% in February and -22.3% in January Prices increased by 1.7% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is -26.5%.
• Inflation for processed food products decreased from 4.7% in February to 4.2% in March. In January, it was 5.6%. Prices increased by 0.6% on average compared to the previous month. The average inflation rate for the last twelve months is 9.8%.
• Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 1.9% in March compared to 4.6% in February and 7.1% in January. Prices increased on average by 2.3% compared to February. The average inflation rate of this aggregate for the last twelve months is 9.5%.
• Inflation for non-energy industrial goods stood at 1.7% in March, compared to 2.4% in February and 4.3% in January. Prices have decrease by 0.3% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 4.4%.
• Inflation for services (including rents) has increased from 4.9% in February to 5.1% in March. Prices increased by 0.2% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 6.1%.

Core inflation (inflation without energy and unprocessed food) stood at 3.9% in March. This is a slight decrease compared to the 4.1% rate registered in February. Average core inflation over the last 12 months amounts to 6.4%. Prices of this subaggregate have increased by 0.1% compared to the previous month.

Inflation according to specific aggregates

Effect of sub-indices on inflation

The largest upward effect on inflation was caused by natural gas (0.53 percentage points). Tobacco provided a contribution of 0.38 percentage points. Domestic heating oil had an impact of 0.29 points. Restaurants and cafés had an effect of 0.13 percentage points. Rents had a positive effect of 0.13 percentage points. Finally, the maintenance and repair of vehicles had a positive effect of 0.11 percentage points.

Sub-indices with the largest upward effect on inflation

The largest downward effect on inflation came from electricity with -0.75 percentage points. Dairy products had a negative effect of -0.12 percentage points. Finally, electrical household appliances had a negative effect of -0.10 percentage points.

Sub-indices with the largest downward effect on inflation

Comparison with neighbouring countries

Since the final HICP of the neighbouring countries will not be published until later, comparisons can only be made based on the first HICP flash estimate of March. This inflation in Belgium in March amounted to 3.8%, a slight increase compared to the rate of 3.6% observed in February. The Netherlands registered an inflation rate of 3.1% in March. This is an increase compared to the 2.7% rate registered in February. Inflation in France in March amounted to 2.4%, down from 3.2% in February. The first HICP flash estimate for March in Germany was 2.3%, a decrease compared to February when it was 2.7%.

Since the HICP at constant tax rates for March are not yet published by Eurostat, February is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 1.0% in February, up from a rate of -1.1% in January. In February, this inflation in Germany was running at 2.3%, down from the rate of 2.7% registered in January. Inflation in France decreased from 3.5% in January to 3.3% in February. In the Netherlands, this inflation decreased to 2.0% in February. In January, it was 2.4%.

^[1] In addition to the national consumer price index (CPI), Statbel also calculates a European harmonised consumer price index (Harmonised Index of Consumer Prices, HICP). The HICP is used to compare inflation rates in the EU Member States. To this end, the applied expenditure approach and methods have been coordinated as much as possible and laid down in European regulations. The results of the CPI and HICP are not the same. This is mainly due to a different weighting and composition of the basket of goods and services on which these indices are based.

The HICP is also used by the European Central Bank in its monetary policy. Additionally, the HICP is used to determine to what extent a Member State meets the inflation criteria set in the Treaty on European Union.

Differences between the HICP and the current CPI are:

• The weighting of the basket of goods and services in the HICP is mainly based on the national accounts. At lower detailed levels the Household Budget Survey is used. The CPI mostly uses the Household Budget Survey at all levels.
• The reference population of the HICP consists of private households (including tourists in Belgium) and institutional households (e.g. retirement homes and nursing homes). In the CPI, this population currently consists of private households with a reference person under a maximum age.
• The HICP uses the concept of domestic expenditure: expenditure in Belgium by the reference population. The CPI uses the concept of national expenditure: expenditure by the reference population irrespective of the location.
• Seasonal adjustment is not applied in the HICP, but is applied in the CPI to travels abroad and stays in holiday villages.
• Sales periods have been neutralised in the CPI , but are included in the same month in the HICP.
• Current prices for domestic heating oil are used in the HICP calculation. A weighted 12-month average is applied in the CPI calculation.

^[2] The HICP-CT is calculated in the same way as the regular HICP, but the prices in this index are calculated based on constant tax rates. This index therefore reflects the theoretically potential effect of changes in indirect tax rates (such as VAT or excise duties) on measured inflation. However, this is a theoretical effect, since it presupposes that tax changes are immediately and entirely reflected in prices paid by consumers.

^[3] Inflation on annual basis measures the price changes between the current month and the same month of the year before. A 12-month average compares the average HICP of the last 12 months with the average of the previous 12 months. A monthly change compares the price levels of the last two months.

^[4] The effect on inflation shows the changes on the inflation rate by including the sub-index in the HICP. The effect not only takes the weight of the sub-index into account, but it also takes into account whether the sub-index inflation is higher or lower than that of the total expenditure (overall HICP).