Inflation decreases for the fourth month in a row and amounts to 0.48 %

Consumer prices
Inflation decreases for the fourth month in a row and amounts to 0.48 %

Consumer price index of May 2020

  • Inflation decreases from 0.57 % to 0.48 % in May.
  • The consumer price index decreased by 0.08 point or 0.07 % this month.
  • Inflation based on the health index declined from 1.14 % to 1.11 %.
  • The smoothed health index amounts to 107.84 points in May.
  • The most significant price increases in May were registered for mobile telephone services, fish and seafood and bundled telecommunication services. However, domestic heating oil, non-alcoholic beverages and meat had a decreasing effect on the index.
  • 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 (bars, restaurants, travels, etc.) 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), they are in order to distort as little as possible the global inflation rate. More information are available here. In practice, in May this means that flowers and plants have had an increasing effect on the index due to the carry forward of prices with last year’s seasonal correction factor. For airplane tickets, hotel rooms, holiday villages and campings there is a decreasing effect on the index for the same reason.

The consumer price index amounts to 109.45 points in May 2020. The index has decreased by 0.08 point over the month. Inflation has dropped from 0.57 % to 0.48 %. The health index loses 0.12 point and is now at 110.10 points. Inflation based on the health index has gone down from 1.14 % to 1.11 %. The most significant price increases were registered for mobile telephone services, fish and seafood and bundled telecommunication services. However, domestic heating oil, non-alcoholic beverages, vegetables and meat had a decreasing effect on the index.

cpi _1graph202005_en

 

The consumer price index has dropped by 0.08 point or 0.07 % in May 2020 and now stands at 109.45 points, against 109.53 points in April 2020 (2013=100).

The health index has gone down by 0.12 point to 110.10 points in May, compared to 110.22 points in April. The smoothed health index amounts to 107.84 points in May. The next central index for public service and social benefits is set at 109.34 points.

Products with the largest upward effect in May were mobile telephone services, fish and seafood and bundled telecommunication services. However, domestic heating oil, non-alcoholic beverages, vegetables and meat provided the largest downward pressure compared to last month. The most important trends this month are:

 

Upward: Effect: Downward: Effect:
Mobile telephone services +0.040 point Airplane tickets (*) -0.065 point
Fish and seafood +0.040 point Holiday villages (*) -0.050 point
Bundled telecommunication services +0.035 point Domestic heating oil -0.040 point
Flowers and plants (*) +0.030 point Non-alcoholic beverages -0.035 point
    Hotel rooms (*) -0.030 point
    Fresh vegetables -0.030 point
    Meat -0.030 point

(*) consequence of the carry forward of prices with a seasonal correction factor

In May, prices for mobile telephone services increased by 7.3 % on average compared to last month. Fish and seafood have become on average 3.1 % more expensive this month. Prices of bundled telecommunication services increased by 1.2 % on average. The price increases for telecommunications are mostly due to the expiry of temporary actions due to the covid crisis (e.g. more data, more call minutes, etc.).

Domestic heating oil, calculated based on a smoothed 12-month moving average, cost on average 3.3 % less this month compared to the previous month. Non-alcoholic beverages are on average 1.7 % less expensive compared to the previous month. Prices for fresh vegetables have gone down by 3.8 % this month. Meat has become on average 0.7 % less expensive.

Inflation now amounts to 0.48 % compared to 0.57 % in April and 0.62 % in March. Inflation based on the health index amounted to 1.11 % this month compared to 1.14 % in April and 0.84 % in March. Inflation without energy has increased to 2.05 % in May compared to 2.02 % last month and 1.73 % in March. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.63 % in May, compared to 1.58 % in April and 1.55 % in March.

Food inflation (including alcoholic beverages) stands at 4.10 %, compared to 4.06 % in the previous month and 2.46 % in March. Fresh fruit now costs 13.1 % more than in May 2019. Fresh vegetable prices are on the rise: 8.9 % on an annual basis. This is largely the result of a lower supply of some products due to lower harvests because of poorer weather conditions. Fish and seafood are 5.8 % more expensive than in May 2019, mainly due to more expensive shrimps that recorded their lowest price last year in May. Meat is 3.4 % more expensive than in May 2019. This is mainly the result of the price increase of pork due to the increased demand from China on the European market, due to the African swine fever. Prices for non-alcoholic beverages are now on average 1.5 % higher than in May last year. Alcoholic beverages are 5.5 % more expensive than last year. Tobacco prices went up by 2.3 % compared to May 2019.

Energy inflation is now running at -2.94 %, against -2.07 % last month and -3.37 % in March. Electricity is now 7.9 % less expensive than a year ago. Natural gas is 16.7 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 10.9 % over a year. Motor fuels are 19.6 % less expensive than last year. Inflation for services rose to 1.42 % from 1.20 % last month. Inflation for rents amounted to 2.83 % in April and has decreased to 2.68 % in May.

Some products and services that rose sharply in price compared to May last year are:

Upward: Inflation
Fresh seafood 20.8%
Postal mail 13.8%
Fresh fruit 13.1%
Fresh vegetables, excluding potatoes 8.9%
Frozen fish 8.1%
Educational text books 7.5%
Jewellery 7.2%
Coffee machines, tea makers and similar appliances 7.1%

Some products and services that dropped sharply in price compared to May last year are:

Downward: Inflation
Other fuels (LPG) -24.2%
Diesel -20.4%
Petrol -19.4%
Natural gas -16.7%
Domestic heating oil -10.9%
Mobile telephone services -8.8%
Electricity -7.9%
Video equipment (TV sets, etc.) -4.9%

The main group with the largest upward effect[i] on inflation in May was "Food and non-alcoholic beverages" with an effect of 0.76 percentage point. The largest downward effect was measured for “Transport” with -0.63 percentage point.

cpi_3graph202005_en

The main group with the largest contribution[ii] to inflation is "Food and non-alcoholic beverages" with 0.70 percentage point. The lowest contribution to inflation was registered by the main group "Transport", with -0.45 percentage point.

cpi_4graph202005_en

 

cpi _2graph202005_en

 

2013 = 100 February March April May
Consumer price index 109.71 109.53 109.53 109.45
Inflation 1.10% 0.62% 0.57% 0.48%
Health index 109.87 109.96 110.22 110.10
Smoothed health index* 107.25 107.49 107.74 107.84
* defined in the law of 23 April 2015 on the promotion of employment (Belgian Official Journal of 27 April 2015)

The first inflation estimate according to the European harmonised index of consumer prices (HICP flash estimate) for Belgium amounts to -0.2% in May. The difference between the HICP and the national consumer price index (CPI) is mainly due to conceptual differences in terms of weight source, reference population, spending concept, seasonal adjustment and moving average (smoothing).

 

[i]An effect on inflation shows the changes on the inflation rate by including this product group in the CPI calculation. The effect not only takes the weight of the product group into account, but it also takes into account whether the product group inflation is higher or lower than that of the total expenditure (overall CPI).

[ii]The contribution to inflation of a specific product group shows how much of the change in the total expenditure is due to the price variation of this product group.