Consumer price index

Inflation increases slightly and stands at 0.60 %

Consumer prices
Inflation increases slightly and stands at 0.60 %

Consumer price index of June 2020

  • Inflation increases from 0.48 % to 0.60 % in June.
  • The consumer price index this month increases by 0.07 point or 0.06 %.
  • Inflation based on the health index declined from 1.11 % to 0.94 %.
  • The smoothed health index was running at 107.88 points in June.
  • The most significant price increases in June were registered for motor fuels and bundled telecommunication services. However, alcoholic beverages, fish and seafood, airplane tickets and meat have had a decreasing effect on the index.
  • The current measures due to the COVID-19 had a very small impact on the calculation of the index. For sectors that are completely closed or sectors where no representative price is available, prices are carried forward with or without a seasonal correction factor. These methods are in line with the methodological recommendations established by Eurostat in consultation with the National Statistical Institutes (Statbel in Belgium). The objective is to distort as little as possible the global inflation rate. More information are available here. In practice, this means that for the month of June 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.

The consumer price index was running at 109.52 points in June 2020. It has increased by 0.07 point over the month. Inflation has gone up to 0.60 % from 0.48 %. The health index loses 0.05 point and is now at 110.05 points. Inflation based on the health index has gone down from 1.11 % to 0.94 %. The most significant price increases were registered for motor fuels and bundled telecommunication services. However, alcoholic beverages, fish and seafood, airplane tickets and meat have had a decreasing effect on the index.

cpi _1graph202006_en

 

The consumer price index has increased by 0.07 point or 0.06 % in June 2020 and now stands at 109.52 points, against 109.45 points in May 2020 (2013=100).

The health index has gone down by 0.05 point to 110.05 points in June, compared to 110.10 points in May. The smoothed health index was running at 107.88 points in June. The next central index for public service and social benefits is set at 109.34 points.

The products with the largest upward effect in June were motor fuels and bundled telecommunication services. However, alcoholic beverages, fish and seafood, airplane tickets and meat provided the largest downward pressure compared to last month. The most important trends this month are:

Upward: Effect: Downward: Effect:
Motor fuels +0,210 point Alcoholic beverages -0,085 point
Holiday villages (*) +0,060 point Fish and seafood -0,045 point
Bundled telecommunication services +0,025 point Airplane tickets -0,045 point
    Meat -0,025 point

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

In June, prices for motor fuels increased by 6.7 % on average compared to last month. Prices of bundled telecommunication services increased by 0.8 % on average. The price increases for telecommunications are partly due to the expiry of temporary actions due to the covid crisis (e.g. more data, more call minutes, etc.).

Alcoholic beverages became on average 4.4 % less expensive compared to last month. Fish and seafood are on average 3.3 % less expensive compared to the previous month. Prices for airplane tickets have gone down by 6.4 % this month. Meat has become on average 0.7 % less expensive.

Inflation now stands at 0.60 %, as against 0.48 % in May and 0.57 % in April. Inflation based on the health index amounted to 0.94 % this month compared to 1.11 % in May and 1.14 % in April. Inflation without energy has decreased to 1.68 % in June compared to 2.05 % last month and 2.02 % in April. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.41 % in June, compared to 1.63 % in May and 1.58 % in April.

Food inflation (including alcoholic beverages) stands at 3.24 %, compared to 4.10 % in the previous month and 4.06 % in April. Fresh fruit now costs 15.8 % more than in June 2019. Fresh vegetable prices are on the rise: 9.0 % on an annual basis. This is largely the result of a lower supply of some products due to lower harvests because of poorer weather conditions. Fish and seafood are 2.9 % more expensive than a year ago. Meat is 2.6 % more expensive than in June 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 1.5 % higher than in June last year. Alcoholic beverages are 2.5 % more expensive than last year. Tobacco prices went up by 1.6 % compared to June 2019.

Energy inflation now stands at -10.61 %. Electricity is now 7.7 % less expensive than a year ago. Natural gas is 17.0 % cheaper on an annual basis. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have declined by 12.2 % over a year. Motor fuels are 10.5 % less expensive than last year. Inflation for services has declined to 1.23 % from 1.42 %. Inflation for rents amounts to 2.68 % in May and has increased to 2.75 % in June.

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

Upward: Inflation
Fresh fruit 15.8%
Software 14.8%
Fresh seafood 14.1%
Postal mail 13.8%
Fruit wine 10.0%
Fresh vegetables, excluding potatoes 9.0%
Alcoholic soft drinks 8.7%
Educational text books 7.5%

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

Downward: Inflation
Natural gas -17.0%
Holiday centres, camping sites and youth hostels -13.0%
Domestic heating oil -12.2%
Diesel -11.3%
Petrol -10.6%
Electricity -7.7%
Pizza and quiche -6.2%
Mobile telephone services -6.2%

The main group with the largest upward effect[i] on inflation in June was "Food and non-alcoholic beverages" with an effect of 0.59 percentage point. The largest downward effect was measured for “Housing, water and energy” with -0.61 percentage point.

cpi_3graph202006_en

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 -0.40 percentage point.

cpi_4graph202006_en

 

cpi _2graph202006_en

 

2013 = 100 March April May June
Consumer price index 109.53 109.53 109.45 109.52
Inflation 0.62% 0.57% 0.48% 0.60%
Health index 109.96 110.22 110.10 110.05
Smoothed health index* 107.49 107.74 107.84 107.88
* 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 0.2% in June. 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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