Consumer price index

Inflation decreases and amounts to 0.41 % in December

Consumer prices
Average annual inflation rate amounted to 0.74% in 2020

Average annual inflation rate amounted to 0.74% in 2020

  • Inflation decreased from 0.51 % to 0.41 % in December.
  • The consumer price index this month increases by 0.03 points or 0.03 %.
  • Inflation based on the health index has declined from 0.83 % to 0.64 %.
  • The smoothed health index amounted to 107.72 points in December.
  • The average annual inflation rate of the consumer price index amounted to 0,74% in 2020. The average annual inflation rate of the health index amounted to 0,99%.
  • The most significant price increases in December were registered for motor fuels, rents, bread and cereals and personal care products. However, fruit, domestic heating oil, alcoholic beverages, electricity, vegetables and shoes have had a decreasing effect on the index.
  • The current measures due to the COVID-19 had an impact on the calculation of the index. More information is available here. In practice, this means that for the month of December there is an increasing effect on the index for holiday villages due to the carry forward of prices with last year’s seasonal correction factor. For hotel rooms, there is a decreasing effect on the index for the same reason.

The consumer price index amounts to 109.49 points in December 2020. It has increased by 0.03 points over the month. Inflation has dropped from 0.51 % to 0.41 %. The health index loses 0.03 points and is now at 109.88 points. Inflation based on the health index has fallen to 0.64 % from 0.83 %. The most significant price increases were registered for motor fuels, rents, bread and cereals and personal care products. However, fruit, domestic heating oil, alcoholic beverages, electricity, vegetables and shoes have had a decreasing effect on the index.

cpi _1graph202012_en

The average annual inflation rate in 2020 amounted to 0,74% compared to 1,44% in 2019. The average annual inflation rate of the health index amounted to 0,99% in 2020 compared to 1,46% in 2019.

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

Upward: Average annual inflation rate
Fresh seafood 0,212
Postal services 0,138
Jewelry 0,094
Fresh fruit 0,086
Newspapers 0,07
Pork meat 0,065
Wine based on other fruits (cider, …) 0,063
Domestic services 0,063

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

Downward: Average annual inflation rate
Natural gas -14.5%
Domestic fuel -12.9%
Diesel -9.5%
Mobile phone services -6.9%
Petrol -6.7%
Electicity -6.4%
Video equipement (television,home cinema,... -4.2%
Smartphones -3.8%

 

The consumer price index has risen by 0.03 points or 0.03 % in December 2020 and is now running at 109.49 points, compared to 109.46 points in November 2020 (2013=100). The health index has gone down by 0.03 points to 109.88 points in December, compared to 109.91 points in November. The smoothed health index amounted to 107.72 points in December. The next central index for public service and social benefits is set at 109.34 points.

Products with the largest upward effect in December were motor fuels, rents, holiday villages and camping sites, bread and cereals and personal care products. However, fruit, domestic heating oil, alcoholic beverages, electricity, vegetables, shoes and hotel rooms have had a decreasing effect on the index. The most important trends this month are:

Upward: Effect: Downward: Effect:
Motor fuels +0,100 point Fruit -0,085 point
Rent +0,065 point Domestic heating oil -0,050 point
Holiday villages and camping sites (*) +0,030 point Alcoholic beverages -0,040 point
Bread and cereals +0.020 point Electricity -0,025 point
Personal care products +0.020 point Vegetables -0.025 point
    Footwear -0.020 point
    Hotel rooms (*) -0.020 point

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

Motor fuels became on average 2.9 % more expensive. Rent prices rose by 0.8 % on average. Bread and cereals were on average 0.6 % more expensive than last month. Prices for personal care products have increased on average by 1.4 %.

Fruit became on average 5.1 % less expensive compared to last month. Domestic heating oil prices went down by 4.9 %. Alcoholic beverages have become on average 2.1 % less expensive this month. Vegetables decreased in price by 1.2 % on average compared to last month. Electricity has become on average 0.8 % less expensive. Prices for footwear have decreased by 1.7 %.

Inflation now amounts to 0.41 % compared to 0.51 % in November and 0.74 % in October. Inflation based on the health index amounted to 0.64 % this month compared to 0.83 % in November and 1.04 % in October. Inflation without energy has gone down to 1.40 % in December compared to 1.56 % in November and 1.75 % in October. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, amounts to 1.33 % in December, compared to 1.34 % in November and 1.38 % in October.

Inflation of food now amounts to 1.74 %, compared to 2.40 % last month and 3.30 % in October. Fresh fruit now costs 1.3 % less than in December 2019. Fresh vegetable prices are on the rise: 3.0 % on an annual basis. Fish and shellfish are 6.8 % more expensive than in December 2019. Meat is 1.9 % more expensive than last year. Prices for non-alcoholic beverages are now on average 1.1 % higher than in December last year. Alcoholic beverages are 3.0 % more expensive than last year. Tobacco prices went up by 1.9 % compared to December 2019.

Energy inflation is now running at -8.98 %, compared to -9.46 % in November and -8.73 % in October. Electricity is now 4.5 % less expensive than a year ago. Natural gas is 8.4 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 27.7 % over a year. Motor fuels are 7.7 % less expensive than last year. Inflation for services remains unchanged at 1.30 %. Inflation for rents amounted to 2.89 % in November and has increased to 3.63 % in December.

 

The main group with the largest upward effect[i] on inflation in December was "Food and non-alcoholic beverages" with an effect of 0.25 percentage points. The largest downward effect was measured for “Housing, water and energy” with -0.39 percentage points.

cpi _3graph202012_en

The main group with the largest contribution[ii] to inflation is "Food and non-alcoholic beverages" with 0.28 percentage points. The lowest contribution to inflation was registered by the main group “Housing, water and energy”, with -0.25 percentage points.

cpi _4graph202012_en

 

cpi _2graph202012_en

2013 = 100

September October November December
Consumer price index 109.42 109.64 109.46 109.49
Inflation 0.90% 0.74% 0.51% 0.41%
Health index 109.78 110.11 109.91 109.88
Smoothed health index* 107.85 107.86 107.80 107.72
* 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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