Inflation decreases and amounts to 0.74 %
Consumer price index of October 2020
- Inflation decreased from 0.90 % to 0.74 in October.
- The consumer price index this month increases by 0.22 point or 0.20 %.
- Inflation based on the health index has declined from 1.11 % to 1.04 %.
- The smoothed health index stood at 107.86 points in October.
- The most significant price increases in October were registered for electricity, natural gas, meat, private rent, the purchase of vehicles, holiday villages and camping sites, dairy products and airplane tickets. However, alcoholic beverages, domestic heating oil, fruit and other food products (incl. ready-made meals, vegetarian and dietary products) have had a decreasing effect on the index.
The consumer price index amounts to 109.64 points in October 2020. It has increased by 0.22 point over the month. Inflation has dropped from 0.90 % to 0.74 %. The health index gained 0.33 point and is now at 110.11 points. Inflation based on the health index has fallen to 1.04 % from 1.11 %. The most significant price increases were registered for electricity, natural gas, meat, private rent, the purchase of vehicles, holiday villages and camping sites, dairy products and airplane tickets. However, alcoholic beverages, domestic heating oil, fruit and other food products (incl. ready-made meals, vegetarian and dietary products) have had a decreasing effect on the index.
The consumer price index has risen by 0.22 point or 0.20 % in October 2020 and is now running at 109.64 points, compared to 109.42 points in September 2020 (2013=100).
The health index has gained 0.33 point to 110.11 points in October, compared to 109.78 points in September. The smoothed health index stood at 107.86 points in October. The next central index for public service and social benefits is set at 109.34 points.
Products with the largest upward effect in October were electricity, natural gas, meat, private rent, the purchase of vehicles, holiday villages and camping sites, dairy products and airplane tickets. However, alcoholic beverages, domestic heating oil, fruit and other food products (incl. ready-made meals, vegetarian and dietary products) have had a decreasing effect on the index. The most important trends this month are:
|Electricity||+0,100 point||Alcoholic beverages||-0,065 point|
|Natural gas||+0,075 point||Domestic heating oil||-0,055 point|
|Meat||+0,060 point||Fruit||-0,030 point|
|Private rent||+0,030 point||Other food products||-0,025 point|
|Purchase of vehicles||+0,030 point|
|Holiday villages and camping sites||+0,025 point|
|Dairy products||+0,025 point|
|Airplane tickets||+0,025 point|
In October, prices for electricity increased by 3.0 % on average compared to last month. Prices for natural gas increased on average by 5.5 %. Meat is on average 1.4 % more expensive than last month. Prices for private rent have increased on average by 0.4 %. The purchase price of vehicles has increased by 0.4 %. After seasonal adjustment, stays in holiday villages and camping sites cost on average 4.7 % more. Prices of dairy products have gone up by 1.1 % on average compared to last month. Airplane tickets have become on average 4.1 % more expensive.
Alcoholic beverages became on average 3.2 % less expensive compared to the previous month. Domestic heating oil prices went down by 5.0 %. Fruit has become on average 1.7 % less expensive and prices for other food products decreased by 2.0 % on average.
Note about inflation for commonly purchased products
The table below shows the inflation of a number of commonly purchased products. For almost all commonly purchased products, inflation has slightly decreased these past few months. We only observe an increase in inflation for small appliances for personal care (there were special offers last month for this product group). Given the limited weight of this group, its impact on inflation is limited. Overall, we observe a decrease in inflation for commonly purchased products.
|COICOP||Name||Weight in the basket (on 1000)||Jul/2020||Aug/2020||Sep/2020||Oct/2020|
|1||Food and non-alcoholic beverages||175.5||+3.7%||+3.7%||+3.5%||+3.3%|
|05.6.1||Non-durable household goods||9.1||+0.7%||+2.5%||+2.3%||+1.9%|
|05.6.1.1||Cleaning and maintenance products||5.9||-0.2%||+2.2%||+2.2%||+1.6%|
|05.6.1.2||Other non-durable small household articles||3.2||+2.3%||+2.9%||+2.4%||+2.4%|
|09.3.4||Pets and related products||7.4||+3.3%||+1.1%||+1.9%||+1.3%|
|12.1.3||Other appliances, articles and products for personal care||14.7||-1.0%||+0.3%||+0.5%||-1.5%|
|126.96.36.199||Non-electrical appliances for personal care||0.8||-2.1%||+2.3%||-2.4%||+2.0%|
|188.8.131.52||Articles for personal hygiene||13.9||-1.0%||+0.2%||+0.7%||-1.7%|
The inflation for food and non-alcoholic beverages (COICOP 01) mainly results from structural factors. We came from a period of low inflation for this group: the inflation in 2019 was the lowest since 2014. In comparison with neighbouring countries, Belgium had the lowest inflation for this group in 2019. Other European countries have also seen an increase in inflation for the COICOP 01 group since the beginning of 2020.
In almost all countries, as in Belgium, the increase is mainly due to the same subgroups, namely fresh products such as fruit, vegetables and pigmeat. For fruit and vegetables, the increased inflation in recent months is mainly due to lower harvests due to poor weather conditions. The inflation for pigmeat is mainly due to the increased demand from China on the European market (due to the African swine fever). The high inflation of fresh seafood, which is specific to Belgium with a contribution of 0.4 percentage points to food inflation, currently stands at 41 %. This high inflation is mainly due to price increases for shrimps, a result of a shortage of peeled shrimps due to measures against Covid-19 in Morocco. This is a product that is mainly consumed in Belgium, which means that the inflation for this group has barely increased in other European countries.
Note about overall inflation
Inflation is now running at 0.74 %, compared to 0.90 % in September and 0.82 % in August. Inflation based on the health index amounts to 1.04 % this month compared to 1.11 % in September and 1.04 % in August. Inflation without energy has decreased to 1.75 % in October compared to 1.96 % last month and 1.82 % in August. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stood at 1.38 % in October, compared to 1.64 % in September and 1.49 % in August.
Energy inflation is now running at -8.73 %, compared to -9.18 % last month and -8.68 % in August. Electricity is now 4.2 % less expensive than a year ago. Natural gas is 10.7 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 20.5 % over a year. Motor fuels are 8.7 % less expensive than last year. Inflation for services has declined to 1.30 % from 1.54 %. Inflation for rents amounts to 2.60 % in September and has increased to 2.95 % in October.
|Fresh vegetables, excluding potatoes||8.3%|
|Accessories for information processing equipment (a.o. printers)||7.3%|
|Charges by banks||7.2%|
Some products and services that rose sharply in price compared to October last year are:
|Domestic heating oil||-20.5%|
|Holiday centres, camping sites and youth hostels||-14.8%|
|Pre-recorded media storage||-11.3%|
The main group with the largest upward effect[i] on inflation in October was "Food and non-alcoholic beverages" with an effect of 0.55 percentage point. The largest downward effect was measured for “Housing, water and energy” with -0.45 percentage point.
The main group with the largest contribution[ii] to inflation is "Food and non-alcoholic beverages" with 0.59 percentage point. The lowest contribution to inflation was registered by the main group “Housing, water and energy”, with -0.24 percentage point.
|2013 = 100||July||August||September||October|
|Consumer price index||109.76||109.83||109.42||109.64|
|Smoothed health index*||107.93||107.92||107.85||107.86|
|* 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 0.4 % in October.
[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.
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.
Belgian private households
Data collection method and possible sampling
Survey technique applied using a computer, based on the use of electronic questionnaires and laptops.
Timing of publication
The results are available on the penultimate working day of the reference period.
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
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.