Consumer price index

Inflation increases from 1.63% to 2.27%

Consumer prices
Inflation increases from 1.63% to 2.27%

Consumer price index of July 2021

  • Inflation increases from 1.63% to 2.27% in July.
  • The consumer price index this month increases by 0.95 points or 0.85%.
  • Inflation based on the health index has increased to 1.83% from 1.14%.
  • The smoothed health index now stands at 109.13 points.
  • The increase in inflation is mainly due to increased inflation for energy.
  • Inflation for food products and non-alcoholic beverages remains negative and currently stands at -0.87%.
  • In July, the main price increases were recorded for electricity, natural gas, motor fuels, hotel rooms, plane tickets, travels and city trips abroad, package holidays in Belgium, holiday villages and camping sites, restaurants and cafés, fire insurance, potatoes and fish and seafood. Rent and personal care products, on the other hand, had a decreasing effect on the index.

The consumer price index is running at 112.25 points in July 2021. It has increased by 0.95 points over the month. Inflation has gone up to 2.27% from 1.63%. The health index gained 0.87 points and is now at 112.18 points. Inflation based on the health index has increased to 1.83% from 1.14%. The main price increases were recorded for electricity, natural gas, motor fuels, hotel rooms, plane tickets, travels and city trips abroad, package holidays in Belgium, holiday villages and camping sites, restaurants and cafés, fire insurance, potatoes and fish and seafood. Rent and personal care products, on the other hand, had a decreasing effect on the index.

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The consumer price index has increased by 0.95 points or 0.85% in July 2021 and now stands at 112.25 points, against 111.30 points in June 2021 (2013=100). The health index has gone up by 0.87 points to 112.18 points in July, compared to 111.31 points in June. The smoothed health index now stands at 109.13 points. The next central index for public service and social benefits is set at 109.34 points.

The products with the largest increasing effect in July are electricity, natural gas, motor fuels, hotel rooms, plane tickets, travels and city trips abroad, package holidays in Belgium, holiday villages and camping sites, restaurants and cafés, fire insurance, potatoes and fish and seafood. Private rent and personal care products, on the other hand, had a decreasing effect on the index. The most important trends this month are:

Upward: Effect: Downward: Effect:
Electricity +0.165 points Private rent -0.165 points
Natural gas +0.120 points Personal care products -0.025 points
Motor fuels +0.120 points    
Hotel rooms +0.105 points    
Airplane tickets +0.105 points    
Travels abroad and city trips +0.060 points    
Package holidays in Belgium +0.045 points    
Holiday villages and camping sites +0.040 points    
Restaurants and cafés +0.035 points    
Fire insurance +0.035 points    
Potatoes +0.030 points    
Fish and seafood +0.030 points    

Electricity and natural gas became on average 4.8% and 7.2% more expensive this month respectively. Motor fuels became on average 3.1% more expensive this month. Hotel rooms and plane tickets rose by an average of 15.1% and 17.3% respectively. Travels and city trips abroad became on average 3.2% more expensive. Package holidays in Belgium have become 13.3% more expensive on average. Holiday villages and camping sites have become more expensive on average by 8.5%. The increase in prices for travel-related products is mainly due to the summer holidays. The price of fire insurance has increased by an average of 2.3%. Potatoes and fish and seafood have become more expensive by an average of 8.4% and 2.5% respectively.

Private rent decreased on average by 0.4% this month. Personal care products became 1.4% cheaper than last month.

Note about inflation for commonly purchased products

The table below shows the inflation of a number of commonly purchased product groups. For almost all commonly purchased products, inflation has been sharply decreasing since the last quarter of last year. See the analysis on ‘Measuring inflation during the coronavirus crisis’ for a discussion on this effect. Since February, inflation for most product groups has even been negative, which means that prices are lower than in the same month a year ago. Food product prices are currently on average 0.96% lower than in July 2020. Articles for personal hygiene are 2.67% less expensive and non-durable household articles are 3.15% cheaper.

COICOP Name Weight in the basket (on 1000) Apr/21 May/21 Jun/21 Jul/21
1 Food and non-alcoholic beverages 178.87 -1.19% -1.58% -1.23% -0.87%
01.1 Food products 161.64 -0.91% -1.55% -1.22% -0.96%
01.2 Non-alcoholic beverages 17.23 -3.89% -1.94% -1.39% 0.01%
05.6.1 Non-durable household goods 8.92 -4.77% -2.17% -1.07% -1.11%%
05.6.1.1 Cleaning and maintenance products 5.71 -5.76% -1.09% 0.14% 0.01%
05.6.1.2 Other non-durable small household articles 3.21 -2.92% -4.17% -3.32% -3.15%
09.3.4 Pets and related products 7.46 -0.52% -1.38% 0.26% -0.01%
12.1.3 Other appliances, articles and products for personal care 14.56 -2.36% -1.94% -2.05% -2.69%
12.1.3.1 Non-electrical appliances for personal care 0.76 -2.80% -1.56% -0.97% -3.08%
12.1.3.2 Articles for personal hygiene and wellness, esoteric products and beauty products 13.80 -2.34% -1.96% -2.11% -2.67%

Note about overall inflation

Inflation is now running at 2.27%, compared to 1.63% in June and 1.46% in May. Inflation based on the health index amounted to 1.83% this month compared to 1.14% in June and 0.81% in May. Inflation without energy has increased to 1.13% in July compared to 0.91% in June and 0.67% in May. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.43% in July, compared to 1.10% in June and 1.00% in May.

Inflation for food products (including alcoholic beverages) stands at -0.88% this month, compared to -1.21% last month. Energy inflation is now running at 14.66%, compared to 10.80% in June and 10.21% in May. Electricity is now 15.3% more expensive than a year ago. Natural gas is 38.8% more expensive on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 15.9% over a year. Motor fuels are 15.6% more expensive than last year. Inflation for services has risen to 2.12% from 1.51%. Inflation for rents remained virtually unchanged at 2.01% in June and 2.00% in July.

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

Upward: Inflation
Natural gas 38.8%
Other fuels (LPG) 34.1%
Postal mail 18.1%
Diesel 15.8%
Electricity 15.3%
Petrol 15.3%
Liquefied petroleum gas (propane) 15.0%
Other tobacco products (e.g. loose tobacco) 12.1%

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

 
Downward: Inflation
Domestic heating oil -15.9%
Smartphones -11.3%
Television sets and video recorders -9.2%%
Other information processing equipment (e.g. smart watch) -7.5%
Fresh fruit -7.5%
Pilsner beer -5.4%
Potatoes -4.9%
Dried fruit -4.1%

The main group with the largest upward effect[i] on inflation in July was ‘housing, water, energy’ with an effect on inflation of 0.69 percentage points. The largest downward effect was measured for “Food and non-alcoholic beverages” with -0.70 percentage points.

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The main group with the largest contribution[ii] to inflation is “housing, water and energy” with 0.96 percentage point. The lowest contribution to inflation was registered by "Food and non-alcoholic beverages", with -0.16 percentage points.

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2013 = 100 April May June July
Consumer price index 110.88 111.05 111.30 112.25
Inflation 1.23% 1.46% 1.63% 2.27%
Health index 110.93 110.99 111.31 112.18
Smoothed health index* 108.35 108.50 108.73 109.13
* 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 1.4% for July 2021, compared to 2.6% in June. The temporary drop 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 August will be temporarily significantly higher.


[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.

Indices
Content

Consumer price index, inflation, health index, health index (moving average), index without energy and petroleum, last 13 months

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Base year
Inflation
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4 groups
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Purpose and brief description

The consumer price index is an economic indicator whose main task is to objectively reflect the price evolution over time for a basket of goods and services purchased by households and considered representative of their consumer habits. The index does not necessarily measure the price level of this basket for a specific period of time, but rather the fluctuation between two periods, the first one acting as basis for comparison. Moreover, this difference in the price level is not measured in absolute, but in relative terms. The consumer price index can be determined as a hundred times the ratio between the observed prices of a range of goods and services at a given time and the prices of the same goods and services, observed under the same circumstances during the reference period, chosen as basis for comparison. Price observations always take place in the same regions.

Since 2014, the consumer price index has been a chain index in which the weighting reference period is regularly shifted and prices and quantities are no longer compared between the current period and a fixed reference period, but the current period is compared with an intermediate period. By multiplying these short-term indices, and so creating a chain, we get a long-term series with a fixed reference period.

Population

Belgian private households

Data collection method and possible sampling

Survey technique applied using a computer, based on the use of electronic questionnaires and laptops.

Frequency

Monthly.

Timing of publication

The results are available on the penultimate working day of the reference period.

Definitions

Weight (CPI): The weight represents the importance of the goods and services included in the CPI in the total expenditure patterns of the households. Weights are determined based on the household budget survey.

Consumer price index (CPI): The consumer price index is an economic indicator whose main task is to objectively reflect the price evolution over time for a basket of goods and services purchased by households and considered representative of their consumer habits.

Health index: The health index is derived from the consumer price index and has been published since January 1994. The current value of this index is determined by removing a number of products from the consumer price index product basket, in particular alcoholic beverages (bought in a shop or consumed in a bar), tobacco products and motor fuels except for LPG.

Inflation: Inflation is defined as the ratio between the value of the consumer price index of a given month and the index of the same month the year before. Therefore, inflation measures the rhythm of the evolution of the overall price level.

Consumer price index without petroleum products: This index is calculated by removing the following products from the consumer price index: butane, propane, liquid fuels and motor fuels.

Consumer price index without energy products: This index is calculated by removing the following products from the consumer price index: electricity, natural gas, butane, propane, liquid fuels, solid fuels and motor fuels.

Smoothed index: The smoothed index is the arithmetic mean of the health index of the last 4 months. The smoothed index is used as basis for the indexation of retirement pensions, social allowances and some wages and salaries. The indexations of public services wages and social benefits are implemented when the smoothed index reaches a certain value, the so-called central index. When the smoothed index reaches the central index, the benefits increase by 2 % the following month. The wages in the public sector also increase by 2 % two months after the central index was reached.

The central index is a predetermined threshold value against which the smoothed health index is compared. If the central index is reached or exceeded, there is an indexation of the wages and salaries or benefits. This indexation is proportional to the percentage between the old and the new central index. For the public sector and social benefits, the difference between the central indices always amounts to 2 %. Therefore, a 2 % indexation is applied every time the central index is reached. There are also collective labour agreements according to which the difference between the central indices amounts to 1 % or 1.5 %. The reaching of a central index then leads to an indexation of 1 % or 1,5 %.
See also: http://www.wedden.fgov.be/indexation/default.htm
And: http://www.traitements.fgov.be/indexation/default.htm

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).

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.

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