Inflation increases from 2.27% to 2.73%

Consumer prices
Inflation increases from 2.27% to 2.73%

Consumer price index of August 2021

  • Inflation increases from 2.27% to 2.73% in August.
  • The consumer price index this month increases by 0.58 points or 0.52%.
  • Inflation based on the health index has increased to 2.30% from 1.83%.
  • The smoothed health index is running at 109.57 points in August. The central index for public service and social benefits, set at 109.34 points, was therefore exceeded.
  • The increase in inflation is mainly due to increased inflation for energy. Prices for natural gas and electricity are currently above the high level at the end of 2018. For electricity, the prices are even at the highest level ever.
  • Inflation for food products and non-alcoholic beverages remains negative and currently stands at -0.34%.
  • The most significant price increases in August were recorded for natural gas, electricity, purchase of vehicles, bread and cereals, hotel rooms, alcoholic beverages, confectionery, private renting and personal care products. However, travels abroad and city trips, airplane tickets and fruit have had a decreasing effect on the index.

Inflation

Inflation is now running at 2.73%, compared to 2.27% in July and 1.63% in June. Inflation based on the health index amounted to 2.30% this month compared to 1.83% in July and 1.14% in June. Inflation without energy has increased to 1.40% in August, compared to 1.13% in July and 0.91% in June. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.65% in August, as against 1.43% in July and 1.10% in June.

The sharp increase in inflation in recent months is due to energy products. Energy inflation is now running at 17.15%, compared to 14.66% last month and 10.80% in June. Electricity is now 17.4% more expensive than a year ago. Natural gas is 49.4% more expensive on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 13.0% over a year. Motor fuels are 15.4% more expensive than last year.

Contribution of energy to inflation

Prices for natural gas and electricity are currently above the high level at the end of 2018. For electricity, the prices are even at the highest level ever.

Electricity and natural gas

Inflation for food products (including alcoholic beverages) stands at -0.27% this month, compared to -0.88% last month. Inflation for services has risen to 2.19% from 2.12%. Inflation for rents amounted to 2.00% in July and has increased to 2.29% in August.

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

Upward: Inflation
Natural gas 49.4%
Other fuels (LPG) 41.2%
Postal mail 18.1%
Electricity 17.4%
Petrol 15.6%
Diesel 15.0%
Liquefied petroleum gas (propane) 14.8%
Other tobacco products (e.g. loose tobacco) 12.4%

Some products and services that fell sharply in price compared to August last year are:

Downward: Inflation
Other information processing equipment (e.g. smart watch) -10.0%
Television sets -9.5%
Fresh fruit -5.5%
Smartphones -5.1%
Potatoes -5.0%
Mineral water -4.4%
Software -4.4%

The main group with the largest upward effect[i] on inflation in August was ‘housing, water, energy’ with an effect on inflation of 0.89 percentage points. The largest downward effect was measured for “Food and non-alcoholic beverages” with -0.69 percentage points.

Effect on inflation

The main group with the largest contribution[ii] to inflation is “housing, water and energy” with 1.20 percentage point. The lowest contribution to inflation was registered by "Food and non-alcoholic beverages", with -0.06 percentage points.

Contribution to inflation

The first inflation estimate according to the European harmonised index of consumer prices (HICP flash estimate) for Belgium amounts to 4.7% for August 2021, compared to 1.4% in July. The temporary increase in inflation for the HICP this month is due to last year's shift of the sales from July to August. For the same reason, HICP inflation in July was temporarily significantly lower.

Explanation of index levels

Index evolution

The consumer price index has increased by 0.58 points or 0.52% in August 2021 and now stands at 112.83 points, against 112.25 points in July 2021 (2013=100). The health index has gained 0.56 point to 112.74 points in August, compared to 112.18 points in July. The smoothed health index is running at 109.57 points in August. The central index for public service and social benefits, set at 109.34 points, was therefore exceeded. This means that social security benefits and pensions will be raised by 2 % in September. Wages in the public sector will be indexed by 2% in October. The last time the central index was exceeded was in February 2020. The next central index for public service and social benefits is set at 111.53 points.

Products with the largest upward effect in August are natural gas, electricity, purchase of vehicles, bread and cereals, hotel rooms, alcoholic beverages, confectionery, private renting and personal care products. However, travels abroad and city trips, airplane tickets and fruit have had a decreasing effect on the index. The most important trends this month are:

Upward: Effect: Downward: Effect:
Natural gas +0.120 points Travels abroad and city trips -0.045 points
Electricity +0.100 points Airplane tickets -0.040 points
Purchase of vehicles +0.080 points Fruit -0.040 points
Bread and cereals +0.065 points    
Hotel rooms +0.060 points    
Alcoholic beverages +0.060 points    
Confectionery +0.055 points    
Private rent +0.035 points    
Personal care +0.030 points    

Natural gas and electricity were this month on average 6.9% and 2.6% more expensive, respectively. Prices for the purchase of vehicles have increased by an average of 1.1% this month. Bread and cereals became on average 2.0% more expensive this month. Prices of hotel rooms have increased on average by 7.3%. Alcoholic beverages were on average 3.1% more expensive. Prices for confectionery have gone up on average by 4.6%. Private rent increased on average by 0.4% this month. Personal care products became on average 1.0% more expensive.

After seasonal adjustment, travels abroad and citytrips became on average 2.3% cheaper this month. Prices of airplane tickets have fallen by 5.7% on average. Fruit became on average 2.1% less expensive.

2013 = 100 May June July August
Consumer price index 111.05 111.30 112.25 112.83
Inflation 1.46% 1.63% 2.27% 2.73%
Health index 110.99 111.31 112.18 112.74
Smoothed health index* 108.50 108.73 109.13 109.57
* defined in the law of 23 April 2015 on the promotion of employment (Belgian Official Journal of 27 April 2015)


[i] The 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 HICP).

[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.