Consumer price index

Inflation goes from 5.64% to 5.71%

Consumer prices
Inflation goes from 5.64% to 5.71%

Consumer price index of December 2021

  • Inflation increases from 5.64% to 5.71% in December, which is the highest level since July 2008, when it was 5.90%.
  • The consumer price index this month increases by 0.11 points or 0.10%.
  • Inflation based on the health index goes from 4.81% to 5.21%.
  • The smoothed health index amounted to 111.97 points in December. The central index for public service and social benefits, set at 111.53 points, was therefore exceeded.
  • The high inflation this month is due, as in recent months, to the high energy prices. Energy currently has an inflation rate of 41.98% and contributes 3.56 percentage points to the total inflation.
  • Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stood at 2.53% in December, compared to 2.14% in November.
  • The most significant price increases in December were registered for the purchase of vehicles, private rent, domestic heating oil, fish and seafood, personal care products, electricity, holiday villages, travels abroad and city trips, maintenance products and airplane tickets. However, natural gas, motor fuels, alcoholic beverages and fruit have had a decreasing effect on the index.

Inflation

Inflation now amounts to 5.71% compared to 5.64% in November and 4.16% in October. Inflation based on the health index amounted to 5.21% this month compared to 4.81% in November and 3.48% in October. Inflation without energy has gone up to 2.35% in December compared to 1.88% in November and 1.68% in October. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, amounts to 2.53% in December, compared to 2.14% in November and 1.95% in October.

Inflation for food products (including alcoholic beverages) stands at 1.21% this month, compared to 0.47% last month. Inflation for services has risen to 2.82% from 2.64%. Inflation for rent remains unchanged at 2.27%.

Core inflation and inflation without energy

The sharp increase in inflation in recent months is due to energy products. Energy inflation is now running at 41.98%, compared to 46.40% in November and 30.86% in October. Electricity is now 44.1% more expensive than a year ago. Natural gas is 97.0% more expensive on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have increased by 33.3% in one year. Motor fuels are 22.6% more expensive than last year.

Contribution of energy to inflation

The increase in inflation in the second half of 2021 is due to the high energy prices. Energy has currently an inflation of 41.98% and has a contribution of 3.56 percentage points to the total inflation.

Indices for electircity and natural gas

The price of natural gas has decreased by 8.4% on average compared to the previous month. The price for electricity has slightly increased again by 0.8% on average.

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

Upward: Inflation
Natural gas 97.0%
Other fuels (LPG) 57.1%
Electricity 44.1%
Domestic heating oil 33.3%
Liquefied petroleum gas (propane) 28.0%
Diesel 22.6%
Petrol 22.3%
Postal mail 18.1%

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

Downward: Inflation
Television set -11.5%
Software -8.2%
Recording media (a.o. memory card) -7.4%
Other information processing equipment (e.g. smart watch) -7.2%
Cocoa -5.2%
Smartphones -5.0%
Mobile telephone services -2.7%
Fresh fruit -2.7%

The main group with the largest upward effect[i] on inflation in December was ‘Housing, water, energy’ with an effect on inflation of 2.58 percentage points. The largest downward effect was measured for ‘Food and non-alcoholic beverages’ with -0.98 percentage points.

Effect on inflation

The main group with the largest contribution[ii] to inflation is ‘Housing, water and energy’ with 3.11 percentage points. The lowest contribution to inflation was registered by the main groups ‘Health’, ‘Communication’ and ‘Education’, with 0.01 percentage points each.

Contribution to inflation

The first inflation estimate according to the European harmonised index of consumer prices (HICP flash estimate) for Belgium amounts to 6.5% for December 2021, compared to 7.1% in November. The difference in inflation between the CPI and the HICP is mainly due to another calculation method for domestic heating oil.

Explanation of index levels

Index evolution

The consumer price index has risen by 0.11 points or 0.10% in December 2021 and is now running at 115.74 points, compared to 115.63 points in November 2021 (2013=100). The health index has gone up by 0.40 points to 115.60 points in December, compared to 115.20 points in November. The smoothed health index amounted to 111.97 points in December. The central index for public service and social benefits, set at 111.53 points, was therefore exceeded. This means that social security benefits and pensions will be raised by 2% in January. Wages in the public sector will be indexed by 2% in February. Wages in the private sector are also linked with the smoothed health index, but the timing of indexation depends on the sectoral collective labour agreement. The last time the central index was exceeded was in August 2021. The next central index for public service and social benefits is set at 113.76 points.

Products with the largest increasing effect in December were the purchase of vehicles, private rent, domestic heating oil, fish and seafood, personal care products, electricity, holiday villages and camping sites, travels abroad and city trips, maintenance products and airplane tickets. However, natural gas, alcoholic beverages and fruit have had a decreasing effect on the index. The most important trends this month are:

Upward: Effect: Downward: Effect:
Purchase of vehicles +0.130 points Natural gas -0.250 points
Private rent +0.070 points Motor fuels -0.205 points
Domestic heating oil +0.055 points Alcoholic beverages -0.070 points
Fish and seafood +0.045 points Fruit -0.050 points
Personal care products +0.040 points    
Electricity +0.040 points    
Holiday villages +0.035 points    
Travels abroad and city trips +0.030 points    
Maintenance products +0.030 points    
Airplane tickets +0.030 points    

The purchase of vehicles became on average 1.7% more expensive. Private rent increased on average by 0.8% this month. The smoothed domestic heating oil prices have gone up by 4.9% on average this month. Fish and seafood have become on average 3.4% more expensive. Prices for personal care products have increased on average by 1.3% this month. Electricity became on average 0.8% more expensive. Prices in holiday villages have gone up by 7.2% on average. Travels abroad and city trips became on average 1.4% more expensive this month. Maintenance products have become on average 1.4% more expensive. Airplane tickets have gone up by 4.5% on average this month.

Natural gas has become on average 8.4% less expensive this month. Motor fuels became on average 4.6% less expensive. Prices of alcoholic beverages have gone down by 3.4% on average this month. Prices for fruit have decreased on average by 3.0%.

2013 = 100 September October November December
Consumer price index 112.55 114.20 115.63 115.74
Inflation 2.86% 4.16% 5.64% 5.71%
Health index 112.29 113.94 115.20 115.60
Smoothed health index* 109.89 110.53 111.27 111.97
* 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.

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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