Consumer price index

Inflation increases slightly and stands at 0.82 %

Consumer prices
Inflation increases slightly and stands at 0.82 %

Consumer price index of August 2020

  • Inflation increases from 0.73 % to 0.82 % in August.
  • The consumer price index this month increases by 0.07 point or 0.06 %.
  • Inflation based on the health index has increased to 1.04 % from 1.00 %.
  • The smoothed health index is running at 107.92 points in August.
  • The most significant price increases in August were registered for non-alcoholic beverages, restaurants and cafés, bread and cereals, hotel rooms, alcoholic beverages and the purchase of vehicles. However, fruit, airplane tickets, vegetables, holiday villages and camping sites have had a decreasing effect on the index.

The consumer price index is running at 109.83 points in August 2020. It has increased by 0.07 point over the month. Inflation has gone up to 0.82 % from 0.73 %. The health index gained 0.04 point and is now at 110.20 points. Inflation based on the health index has gone up from 1.00 % to 1.04 %. The most significant price increases were registered for non-alcoholic beverages, restaurants and cafés, bread and cereals, hotel rooms, alcoholic beverages and the purchase of vehicles. However, fruit, airplane tickets, vegetables, holiday villages and camping sites have had a decreasing effect on the index.

cpi _1graph202008_en

The consumer price index has increased by 0.07 point or 0.06 % in August 2020 and now stands at 109.83 points, against 109.76 points in July 2020 (2013=100).

The health index has gained 0.04 point to 110.20 points in August, compared to 110.16 points in July. The smoothed health index is running at 107.92 points in August. The next central index for public service and social benefits is set at 109.34 points.

Products with the largest upward effect in August were non-alcoholic beverages, restaurants and cafés, bread and cereals, hotel rooms, alcoholic beverages and the purchase of vehicles. However, fruit, airplane tickets, vegetables, holiday villages and camping sites provided the largest downward pressure compared to last month. The most important trends this month are:

 

Upward: Effect: Downward: Effect:
Non-alcoholic beverages +0,065 point Fruit -0,070 point
Restaurants and cafés +0,045 point Airplane tickets -0,055 point
Bread and cereals +0,035 point Vegetables -0,055 point
Hotel rooms +0,035 point Holiday villages and camping sites -0,035 point
Alcoholic beverages +0,030 point    
Purchase of vehicles +0,030 point    

In August, prices for non-alcoholic beverages increased by 3.5 % on average compared to last month. Prices in restaurants and cafés increased by 0.7 % on average. Bread and cereals are on average 1.0 % more expensive compared to the previous month. Prices for hotel rooms have gone up by 4.5 % this month. Alcoholic beverages became on average 1.5 % more expensive compared to the previous month. The purchase price of vehicles has increased by 0.4 %.

Fruit became on average 4.0 % less expensive compared to last month. Airplane tickets have become on average 7.4 % cheaper. Prices for vegetables have gone down by 2.4 % this month. After seasonal adjustment, stays in holiday villages and camping sites cost on average 6.6 % less.

Inflation is now running at 0.82 %, compared to 0.73 % in July and 0.60 % in June. Inflation based on the health index amounted to 1.04 % this month compared to 1.00 % in July and 0.94 % in June. Inflation without energy has increased to 1.82 % in August, compared to 1.78 % in July and 1.68 % in June. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.49 % in August, against 1.31 % in July and 1.41 % in June.

Food inflation (including alcoholic beverages) stands at 3.56 %, compared to 3.48 % in the previous month and 3.24 % in June. Fresh fruit now costs 10.7 % more than in August 2019. Fresh vegetable prices are on the rise: 5.1 % on an annual basis. These price increases are largely the result of a lower supply of some products due to lower harvests because of poorer weather conditions. Fish and seafood are 5.5 % more expensive than in August 2019, mainly due to price increases for shrimps due to a shortage of peeled shrimps due to measures against Covid-19 in Morocco. Meat is 3.3 % more expensive than in August 2019. This is mainly the result of the price increase of pork due to the increased demand from China on the European market, due to the African swine fever. Prices for non-alcoholic beverages are now on average 4.1 % higher than in August last year. Alcoholic beverages are 2.4 % more expensive than last year. Tobacco prices went up by 1.8 % compared to August 2019.

Energy inflation is now running at -8.68 %, compared to -9.14 % in July and -10.61 % in June. Electricity is now 6.0 % less expensive than a year ago. Natural gas is 15.8 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 14.6 % over a year. Motor fuels are 6.5 % less expensive than last year. Inflation for services rose to 1.33 % from 1.30 % last month. Inflation for rents amounts to 2.29 % in July and has slightly increased to 2.34 % in August.

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

Upward: Inflation
Fresh seafood 34.4%
Postal mail 13.8%
Jewellery 13.2%
Fresh fruit 10.7%
Other fuels 9.7%
Fruit and vegetable juices 9.0%
Breakfast cereals 8.6%
Ice cream and sorbet 7.6%

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

Downward: Inflation
Natural gas -15.8%
Holiday centres, camping sites and youth hostels -15.6%
Domestic heating oil -14.6%
Transport by airplane -14.4%
Diesel -8.3%
Pre-recorded media storage -6.6%
Electricity -6.0%
Petrol -5.8%

The main group with the largest upward effect[i] on inflation in August was "Food and non-alcoholic beverages" with an effect of 0.62 percentage point. The largest downward effect was measured for “Housing, water and energy” with -0.61 percentage point.

cpi _3graph202008_en

The main group with the largest contribution[ii] to inflation is "Food and non-alcoholic beverages" with 0.65 percentage point. The lowest contribution to inflation was registered by the main group “Housing, water and energy”, with -0.35 percentage point.

cpi_4graph202008_en

cpi _2graph202008_en

 

2013 = 100 May June July August
Consumer price index 109.45 109.52 109.76 109.83
Inflation 0.48% 0.60% 0.73% 0.82%
Health index 110.10 110.05 110.16 110.20
Smoothed health index* 107.84 107.88 107.93 107.92
* 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 -0.9% in August. The sharp decrease in inflation is due to the postponement of the summer sales from July to August. The sales are processed in the CPI according to another methodology. This is why the inflation is more stable in Augustus.


[i]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).

[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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