- Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) was running at 2.5% in May compared to 2.1% in April.
- Core inflation (inflation without energy and unprocessed food) was running at 1.1% in May, against 0.9% in April.
- The inflation rate based on the consumer price index (CPI) for May stood at 1.5% compared to 1.2% in April.
- The sub-indices with the largest upward effect on inflation were motor fuels, domestic heating oil, tobacco, gas and electricity.
- The sub-indices with the largest downward effect on inflation this month were meat, vegetables, pharmaceutical products, bread and cereals, fruit, clothing and personal care products.
- The current measures due to the COVID-19 had an impact on the calculation of the index. For sectors where physical outlets are closed, data are collected online when there is no other data source. For sectors that are completely closed, prices are carried forward with or without a seasonal correction factor. These methods are in line with the methodological recommendations established by Eurostat in consultation with the National Statistical Institutes (Statbel in Belgium). The objective is to distort as little as possible the global inflation rate. More information is available here. Currently, this applies mainly to everything related to travel.
- The harmonised index of consumer prices of May for the EU Member States will be published by Eurostat on 17 June.
Inflation based on the European harmonised index of consumer prices (HICP)[1] was running at 2.5% in May compared to 2.1% in April. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)[2] was running at 2.6% in May, compared to 1.8% in April. The difference in inflation between the HICP and the HICP-CT is largely due to the changes in excise duties on tobacco and the temporary reduction of VAT rates in the ‘horeca’ sector. These price changes are not taken into account in the HICP-CT.
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Inflation and effect on inflation for the 12 main groups
Based on the breakdown into 12 main groups, the highest inflation rate in May was measured for "housing, water, energy" (7.9%). The lowest inflation rate was measured for "food and non-alcoholic beverages" (-1.5%).
The main group with the largest upward effect on inflation in May was "housing, water, energy" with an effect on inflation of 1.0 percentage point. The largest downward effect was measured for “food and non-alcoholic beverages” with -0.8 percentage points.
Inflation[3] and effect[4] on inflation for the overall HICP and 12 main groups
| Product group | Weight (‰) | Inflation on annual basis (%) | Effect on inflation (percentage point) | ||||||
|---|---|---|---|---|---|---|---|---|---|
| HICP | HICP-CT | ||||||||
| Mar/21 | Apr/21 | May/21 | May/21 | Mar/21 | Apr/21 | May/21 | |||
| 0 | Total expenditure | 1.000 | 1.6 | 2.1 | 2.5 | 2.6 | |||
| 1 | Food and non-alcoholic beverages | 180.8 | -0.7 | -1.3 | -1.5 | -1.5 | -0.5 | -0.7 | -0.8 |
| 2 | Alcoholic beverages and tobacco | 53.6 | 4.6 | 5.1 | 5.6 | -0.9 | 0.2 | 0.2 | 0.2 |
| 3 | Clothing and footwear | 52.3 | 0.2 | 0.4 | 0.5 | 0.5 | -0.1 | -0.1 | -0.1 |
| 4 | Housing, water and energy | 172.0 | 4.3 | 6.2 | 7.9 | 7.9 | 0.6 | 0.8 | 1.0 |
| 5 | Interior decoration and household appliances | 82.3 | 0.3 | -0.1 | 0.3 | 0.3 | -0.1 | -0.2 | -0.2 |
| 6 | Health | 78.8 | -0.2 | -0.2 | -0.4 | -0.4 | -0.2 | -0.2 | -0.3 |
| 7 | Transport | 116.0 | 3.7 | 5.7 | 6.7 | 6.6 | 0.3 | 0.5 | 0.6 |
| 8 | Communication | 33.0 | 0.6 | 1.9 | 1.3 | 1.3 | 0.0 | 0.0 | 0.0 |
| 9 | Recreation and culture | 81.9 | 0.8 | 1.2 | 0.7 | 0.7 | -0.1 | -0.1 | -0.2 |
| 10 | Education | 5.3 | 0.6 | 0.6 | 0.6 | 0.6 | 0.0 | 0.0 | 0.0 |
| 11 | Hotels, cafés and restaurants | 60.7 | 1.6 | 1.1 | 2.0 | 8.2 | 0.1 | -0.1 | 0.0 |
| 12 | Various goods and services | 83.3 | 0.7 | 0.7 | 1.3 | 1.3 | -0.1 | -0.1 | -0.1 |
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. It was running at 19.8% in May, against 16.2% in April and 8.7% in March. Prices increased on average by 1.4% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is -3.3%.
- Inflation for processed food products slightly increased compared to the previous month. It was running at 1.0% in May compared to 0.9% in April.
- Inflation for unprocessed food (fruit, vegetables, meat and fish) has gone down. It was running at -3.3% in May, against -2.7% in April and -1.9% in March. Prices decreased on average by 0.3% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 2.4%.
- The inflation for non-energy industrial goods was running at 0.4% in May, a slight increase compared to April (0.3%). Prices increased on average by 0.1% compared to the previous month.
- Inflation for services (including rents) amounted to 1.6% in May compared to 1.2 % in April and 1.3% in March. Prices increased on average by 0.2% compared to the previous month.
Core inflation (inflation without energy and unprocessed food) was running at 1.1% in May, a slight increase compared to 0.9% in April. Average core inflation over the last 12 months amounts to 1.2%. Prices of this subaggregate increased by 0.2% compared to the previous month.
Inflation according to specific aggregates
| Specific aggregates | Weight (‰) | Inflation on annual basis (%) | 12-month average (%) | Monthly change | ||
|---|---|---|---|---|---|---|
| Mar/21 | Apr/21 | May/21 | May/21 | May/21 | ||
| Total expenditure | 1000.0 | 1.6 | 2.1 | 2.5 | 0.8 | 0.3 |
| Fuels and energy sources | 95.6 | 8.7 | 16.2 | 19.8 | -3.3 | 1.4 |
| Processed food products | 187.2 | 1.1 | 0.9 | 1.0 | 1.6 | 0.1 |
| Unprocessed food | 47.2 | -1.9 | -2.7 | -3.3 | 2.4 | -0.3 |
| Non-energy industrial goods | 276.9 | 0.3 | 0.3 | 0.4 | 0.5 | 0.1 |
| Services | 393.0 | 1.3 | 1.2 | 1.6 | 1.5 | 0.2 |
| HICP without energy and unprocessed food (core inflation) | 857.2 | 1.0 | 0.9 | 1.1 | 1.2 | 0.2 |
Effect of sub-indices on inflation
The largest upward effect on inflation was caused by motor fuels with an impact of 0.55 percentage points. Domestic heating oil provided an upward effect of 0.53 percentage points. Tobacco provided an effect of 0.23 percentage points. Furthermore, gas and electricity had an impact of 0.21 and 0.20 percentage points, respectively.
Sub-indices with the largest upward effect on inflation
| Sub-index | Weight (‰) | Effect on inflation (percentage point) | |
|---|---|---|---|
| 2021 | May/21 | ||
| 07.2.2 | Motor fuels | 29.6 | 0.55 |
| 04.5.3 | Domestic heating oil | 12.1 | 0.53 |
| 02.2.0 | Tobacco | 35.0 | 0.23 |
| 04.5.2 | Gas | 17.1 | 0.21 |
| 04.5.1 | Electricity | 35.8 | 0.20 |
The largest downward effect on inflation came from meat (-0.14 percentage points). Vegetables provided an effect of -0.13 percentage points. Pharmaceutical products also had a negative effect of -0.13 percentage points. Bread and cereals and fruit both had an effect of -0.11 percentage points. Clothing had a negative impact of -0.08 percentage points. Finally, personal care products provided a negative effect of -0.07 percentage points.
Sub-indices with the largest downward effect on inflation
| Sub-index | Weight (‰) | Effect on inflation (percentage point) | |
|---|---|---|---|
| 2021 | May/21 | ||
| 01.1.2 | Meat | 47.4 | -0.14 |
| 01.1.7 | Vegetables | 17.5 | -0.13 |
| 06.1.1 | Pharmaceutical products | 15.9 | -0.13 |
| 01.1.1 | Bread and cereals | 34.6 | -0.11 |
| 01.1.6 | Fruit | 12.5 | -0.11 |
| 03.1.2 | Clothing | 40.2 | -0.08 |
| 12.1.3 | Personal care products | 13.9 | -0.07 |
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 for May. This inflation amounted to 2.5% in May in Belgium. It increased compared to the 2.1% registered in April. The Netherlands registered an inflation rate of 2.0% in May. This is an increase compared to 1.7% in April. Inflation in France in May amounted to 1.8%, compared to 1.6% in April. In Germany, inflation amounted to 2.4%, which represents an increase compared to an inflation rate of 2.1% in April.
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Since the HICP at constant tax rates for May are not yet published by Eurostat, April is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 1.8% in April, up from a rate of 1.4% in March. In April, this inflation in Germany amounted to 2.3%, which is a slight increase compared to 2.2% in March. This inflation rate in France rose to 1.5% compared to 1.2% in March. In the Netherlands, this inflation rate dropped to 1.3% in April, compared to 1.5% in March.
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[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 in the CPI are systematically spread over 6 months, 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).