Inflation decreases for the third month in a row and amounts to 0.57 %

Consumer price index of April 2020

• Inflation decreases from 0.62 % to 0.57 % in April.
• The consumer price index remains unchanged compared to the previous month.
• Inflation based on the health index has increased to 1.14 % from 0.84 %.
• The smoothed health index stands at 107.74 points in April.
• Besides, this press release contains explications of the inflation rate and price movements of commonly purchased products (food products, non-alcoholic beverages, maintenance products, animal food and personal care products).
• The most significant price increases in April were registered for vegetables, meat, alcoholic beverages, fruit, cleaning and maintenance products, fish and seafood and rents. However, motor fuels, electricity, natural gas, domestic heating oil, bundled telecommunication services and mobile telephone services have had a decreasing effect on the index.
• Airplane tickets and hotel rooms have had an increasing effect on the index due to the carry forward of prices with last year’s seasonal correction factor, in order to distort as little as possible the global inflation rate. For travels abroad, there is a decreasing effect on the index for the same reason.
• The current measures due to the COVID-19 had an impact on the calculation of the index. For sectors where physical outlets are currently closed, data are collected online when there is no other data source. For sectors that are completely closed (restaurants, hairdressers, travels, etc.) prices are carried forward with or without a seasonal correction factor. These methods are in line with the methodological recommendations created by Eurostat in consultation with the National Statistical Institutes (Statbel in Belgium). More information is available here.

The consumer price index stands at 109.53 points in April 2020, and remains stable compared to the previous month. Inflation has dropped from 0.62 % to 0.57 %. The health index gained 0.26 point and is now at 110.22 points. Inflation based on the health index has gone up from 0.84 % to 1.14 %. The most significant price increases were registered for vegetables, meat, alcoholic beverages, fruit, cleaning and maintenance products, fish and seafood and rents. However, motor fuels, electricity, natural gas, liquid fuels, bundled telecommunication services and mobile telephone services have had a decreasing effect on the index.

In April 2020, the consumer price index increased by 0.57 % and now stands at 109.53 points. It remains stable compared to March 2020 (2013=100).

The health index has gained 0.26 point to 110.22 points in April, compared to 109.96 points in March. The smoothed health index stands at 107.74 points in April. The central index for public service and social benefits, set at 109.34 points, has therefore not been reached. The last time the central index was exceeded was in February 2020. This means that social security benefits and pensions were raised by 2 % in March. Wages in the public sector were raised by 2 % in April.

The largest upward pressure in April came from vegetables, meat, alcoholic beverages, fruit, cleaning and maintenance products, fish and seafood and rents. However, motor fuels, electricity, natural gas, liquid fuels, bundled telecommunication services and mobile telephone services provided the largest downward pressure compared to last month. The most important trends this month are:

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

In April, prices for vegetables increased by 5.9 % on average compared to last month. Meat has become on average 2.0 % more expensive. Prices of alcoholic beverages increased by 3.1 % on average. Fruit prices rose by 3.0 % on average. Cleaning and maintenance products are on average 6.5 % more expensive than last month. Fish and seafood increased by 2.4 %. More information on food products among others will be given later on in this press release. Rents went up by 0.3 % this month.

Motor fuels became on average 9.2 % less expensive compared to last month. Prices for electricity, natural gas and liquid fuels decreased by 2,9 %, 4.4 % and 2.6 % respectively compared to last month. Prices for bundled telecommunication services and mobile telephone services decreased this month by 0.9 % and 4.4 % as a consequence of temporary promotions(eg. more mobile data, more calling minutes…) .

Inflation now stands at 0.57%, as against 0.62% in March and 1.10% in February. Inflation based on the health index amounted to 1.14% this month compared to 0.84% in March and 1.00% in February. Inflation without energy increased to 2.02 % in April from 1.73 % in March and 1.79 % in February. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.58% in April, compared to 1.55% in March and 1.71% in February.

Food (incl. alcoholic beverages) inflation stands at 4.06%, up from 2.46% in the previous month and 1.87% in February. Fresh fruit now costs 11.8% more than in April 2019. Fresh vegetable prices are on the rise: 7.0 % on an annual basis. Fish and seafood are 3.8 % more expensive than in April 2019. Meat now costs 5.0 % more than in April 2019. Prices for non-alcoholic beverages are now on average 3.3 % higher than in April last year. Alcoholic beverages are 4.8 % more expensive than last year. Tobacco prices went up by 2.7 % compared to April 2019.

Energy inflation is now running at -2.07%, compared to -3.37% last month and -2.04% in February. Electricity is now 7.6% less expensive than a year ago. Natural gas is 16.2 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 7.6% over a year. Motor fuels are 17.8% less expensive than last year. Inflation for services has declined to 1.20 % from 1.54 %. Inflation for rents amounts to 2.52 % in March and has increased to 2.83 % in April.

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

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

The main group with the largest upward effect^[i] on inflation in April was "Food and non-alcoholic beverages" with an effect of 0.73 percentage point. The largest downward effect was measured for “Transport” with -0.56 percentage point.

The main group with the largest contribution^[ii] to inflation is "Food and non-alcoholic beverages" with 0.71 percentage point. The lowest contribution to inflation was registered by the main group "Transport", with -0.37 percentage point.

 Information on the inflation and price movements for commonly purchased products

The table below shows the inflation for a number of commonly purchased products (food, non-alcoholic beverages, maintenance products, animal food and personal care products), given the recent attention in the media for these product groups. It also shows the monthly price change in April compared to March.

Certain structural causes can explain the generally higher inflation for food products. Therefore, the increase cannot simply be attributed to a Covid-19 effect. We came from a period of low inflation for food products; the inflation in 2019 for those products was the lowest since 2014. Other countries also register an increase of the inflation for food products. For example, the CPI inflation rate for food products in March amounted to 3.2 % in the Netherlands and 3.7 % in Germany. In Belgium, this inflation stood at 2.4 % in March.

The reason for the food inflation increase in April compared to March is mainly due to a high inflation for fresh vegetables and fruit (mainly citrus fruit, strawberries and pears) and pigmeat and derived products. For example, there is a lower stock for pears (not due to the Covid-19). For citrus fruit, the reason is a combination of increased demand and reduced supply due to poor weather conditions in southern European countries. It should be noted that this inflation is also unstable in normal circumstances, as there is no stable seasonal pattern. A Covid-19 effect may have further reduced supply from southern Europe, but this cannot be established with certainty. The high inflation for pigmeat is mainly due to the increased demand from China on the European market, due to the African swine fever. This phenomenon also has an impact in other countries that also register high inflation for the same product groups. For example, the inflation rate for pigmeat in March amounted to 19.5 % in the Netherlands compared to 10.0 % in Belgium. Crisps have registered a higher inflation for about a year now due to a rise in potato prices. The increase in inflation for fresh seafood is mainly due to shrimps, whose wholesale prices have risen since the end of last year and are now reflected in consumer prices. The partial ban on discounts has less impact on the global food inflation because it concerns only a subset of product groups (pizzas, biscuits, preserves, ...) in which quantity discounts are traditionally granted quite often. Temporary phenomena, such as the higher inflation for mutton and lamb meat, also play a role. The latter is an annual phenomenon around Easter. However, it should be noted that the inflation this year is lower (± 7 %) than last year (± 10 %).

For maintenance products, the increase in inflation (6.36 %) can be explained, in part, by last year's period of low inflation (the average inflation rate was even negative for 2019) and, in part, by the lower supply of (quantity) discounts. For these products, a series of (quantity) discounts were granted just prior to the lockdown and ban on discounts starting from 18 March. Given the specific nature of these products (long shelf life), it is also possible that consumers have built up reserves. We see now a slow reintroduction of discounts for these products, which may be linked in part to consumer stockpiling and the application of discounts just before the ban. The ban on discounts also had an impact on a number of other product groups, such as non-alcoholic beverages, but less pronounced than for maintenance products.

In the meantime, there is talk of completely lifting the ban on discounts. If this is the case, it will obviously take some time before new discount actions can be put in place.

Overview of inflation according to CPI and health index

The first inflation estimate according to the European harmonised index of consumer prices (HICP flash estimate) for Belgium amounts to 0.0 % in April. 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).