Consumer price index

Inflation decreases for the second month in a row and amounts to 0.62 %

Consumer prices
Inflation decreases for the second month in a row and amounts to 0.62 %

Consumer price index for March 2020

  • Inflation decreases from 1.10 % to 0.62 % in March.
  • The consumer price index decreases by 0.18 point or 0.16 % this month.
  • Inflation based on the health index falls from 1.00 % to 0.84 %.
  • The smoothed health index amounted to 107.49 points in March.
  • The most significant price increases in March were registered for fruit, travels abroad, rents as well as sugar, jam and chocolate. However, motor fuels, hotel rooms, natural gas, flowers and plants, fish and seafood, bundled telecommunication services, wireless telephone services, cleaning and maintenance products and electricity have had a decreasing effect on the index.

The consumer price index is running at 109.53 points in March 2020. It has decreased by 0.18 point over the month. Inflation has decreased from 1.10 % to 0.62 %. The health index has gained 0.09 point to 109.96 points. Inflation based on the health index has decreased from 1.00 % to 0.84 %. The most significant price increases were registered for fruit, travels abroad, rents as well as sugar, jam and chocolate. However, motor fuels, hotel rooms, natural gas, flowers and plants, fish and seafood, bundled telecommunication services, wireless telephone services, cleaning and maintenance products and electricity have had a decreasing effect on the index.

cpi_1en_202003

The impact of the coronavirus Covid-19 on the compilation of the March Consumer Price Index was limited, the local data collection was largely completed before the measures came into force. Moreover, most of the index basket has been collected centrally for some time. For example, transaction data ("scanner data") from the main supermarket chains have been processed since 2015. The impact of Covid-19 on the April index compilation process will be communicated in the month of April.

The consumer price index fell by 0.18 point or 0.16 % in March 2020 and now stands at 109.53 points, compared to 109.71 points in February 2020 (2013=100).

The health index has increased by 0.09 point to 109.96 points in March, compared to 109.87 points in February. The smoothed health index amounted to 107.49 points in March. The central index for public service and social benefits, set at 109.34 points, has not been reached. The last time the central index was exceeded was last month. This means that social security benefits and pensions rose by 2 % in March. Wages in the public sector will rise by 2 % in April.

The largest upward pressure in March came from fruit, travels abroad, rents as well as sugar, jam and chocolate.

However, motor fuels, hotel rooms, natural gas, flowers and plants, fish and seafood, bundled telecommunication services, wireless telephone services, cleaning and maintenance products and electricity provided the largest downward pressure compared to last month. The most important trends this month are:

Upward: Effect: Downward: Effect:
Fruit +0.130 point Motor fuels -0.245 point
Travels abroad +0.060 point Hotel rooms -0.050 point
Rents +0.035 point Natural gas -0.040 point
Sugar, jam and chocolate +0.035 point Flowers and plants -0.035 point
    Fish and seafood -0.035 point
    Telecommunication services -0.035 point
    Wireless telephone services -0.035 point
    Cleaning and maintenance products -0.030 point
    Electricity -0.025 point

In March, prices for fruit increased by 8.0 % on average compared to the previous month, mainly due to seasonal effects. Travels abroad registered an average index increase of 3.4 %, due to seasonal adjustments. For rents, the price increase amounted to 0.5 %. Prices for sugar, jam and chocolate increased by 3.1 % on average compared to February.

Prices of motor fuels have decreased on average by 6.6 % compared to the previous month. Prices for hotel rooms, natural gas, flowers and plants as well as fish and seafood have decreased by respectively 6.9 %, 2.4 %, 6.7 % and 2.8 % compared to the previous month. Bundled telecommunication services and wireless telephone services have decreased by 1.1 % and 5.6 % this month. Prices of cleaning and maintenance products have fallen by 4.8 % on average. Prices of electricity have dropped by 0.8 %.

Inflation now stands at 0.62 % compared to 1.10 % in February and 1.41 % in January. Inflation based on the health index amounted to 0.84 % this month compared to 1.00 % in the previous month and 1.12 % in January. Inflation without energy decreased to 1.73 % in March, compared to 1.79 % in February and January. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.55 % in March, compared to 1.71 % in February and 1.86 % in January.

Food inflation now stands at 2.46 % compared to 1.87 % last month and 1.03 % in January. Fresh fruit were 4.6 % more expensive than in March 2019. Prices of fresh vegetables have increased by 2.3 % in a year. Fish and seafood have become 2.0 % more expensive compared to March 2019. Prices for meat have increased by 3.4 % compared to last March. Prices for non-alcoholic beverages are on average 1.9 % higher than in March last year. Alcoholic beverages are now 3.8 % more expensive than a year ago. Tobacco prices have gone up by 3 % compared to March 2019.

Energy inflation is now running at -3.37 %, compared to -2.04 % last month and -1.17 % in January. Electricity is now 8.3 % less expensive than a year ago. Natural gas is 17.4 % less expensive on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have decreased by 4.7 % in a year. Motor fuels are now 7.9 % less expensive than a year ago. Inflation for services has decreased to 1.54 % from 2.11 %. Finally, inflation for rents increased to 2.52 % in March from 2.10 % in February.

The following products and services have registered the sharpest price increases compared to last year in March:

Upward: Inflation
Wine from other fruits (cider) 18.5%
Postal mail 13.8%
Pork 10.0%
Jewellery 8.3%
Concentrated milk 7.5%
Educational text books 7.5%
Frozen fish 7.5%
Newspapers 7.1%
Domestic services 6.5%
Fruit and vegetable juices 5.5%
Travel insurance 5.1%

The following products and services have registered the sharpest price decreases compared to last year in March:

Downward: Inflation
Natural gas -17.4%
Wireless telephone services -12.0%
Other fuels for personal transport equipment (LPG) -11.7%
Holiday centres, camping sites, youth hostels and similar accommodation services -11.5%
Diesel -9.7%
Electricity -8.3%
Fresh shellfish -6.4%
Wired telephone services -6.2%
Petrol -5.6%
Video equipment -5.1%
Liquid fuels -4.7%

The main group with the largest upward effect[i] inflation in March was “Food and non-alcoholic beverages” with an effect of 0.38 percentage point. The largest downward effect was measured for “Housing, water and energy” (-0.62 percentage point).

cpi_3en_202003

The main group with the largest contribution[ii] to inflation is “Food and non-alcoholic beverages” with 0.42 percentage point. The lowest contribution to inflation was registered by the main group “Housing, water and energy”, with -0.40 percentage point.

 cpi_4en_202003

 

cpi_2en_202003

 

2013 = 100 December January February March
Consumer price index 109.04 109.69 109.71 109.53
Inflation 0.76% 1.41% 1.10% 0.62%
Health index 109.18 109.72 109.87 109.96
Smoothed health index* 106.76 107.04 107.25 107.49
* 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 1.0 % in March. The difference between the HICP and the national consumer price index (CPI) is mainly due to conceptual differences in terms of weight source, reference population, spending concept, seasonal adjustment and moving average (smoothing).


[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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