Consumer price index

Inflation falls below 1 % and amounts to 0.80 %

Consumer prices
Inflation falls below 1 % and amounts to 0.80 %

Consumer price index - September 2019

  • Inflation decreases from 1.26 % to 0.80 % in September, and is at its lowest level since August 2015.
  • The consumer price index has decreased by 0.50 point or 0.46 % this month.
  • Inflation based on the health index has declined from 1.41 % to 0.99 %.
  • The smoothed health index stood at 106.76 points in September.
  • The most significant price increases in September were registered for travels abroad. However, airplane tickets, hotel rooms, holiday villages and campings, bread and cereals, dairy products, meat, personal care products, confectionery, package holidays in Belgium, alcoholic beverages and oils and fats have had a decreasing effect on the index.

The consumer price index is running at 108.44 points in September 2019. The index has decreased by 0.50 point over the month. Inflation has dropped from 1.26 % to 0.80 %. The health index has decreased by 0.49 point this month and now stands at 108.58 points. Inflation based on the health index has fallen to 0.99 % from 1.41 %. The most significant price increases in September were registered for travels abroad. These increases were mainly offset by price decreases for airplane tickets, hotel rooms, holiday villages and campings, bread and cereals, dairy products, meat, personal care products, confectionery, package holidays in Belgium, alcoholic beverages and oils and fats.

Index evolution

The consumer price index has gone down by 0.50 point or 0.46 % in September 2019 and now amounts to 108.44 points, compared to 108.94 points in August (2013=100).

The health index has gone down by 0.49 point to 108.58 points in September, compared to 109.07 points in August. The smoothed health index stood at 106.76 points in September. The central index for public service and social benefits, set at 107.20 points, has therefore not been reached. The last time the central index was exceeded was in August 2018.

The largest upward pressure in September came from travels abroad. However, airplane tickets, hotel rooms, holiday villages and campings, bread and cereals, dairy products, meat, personal care products, confectionery, package holidays in Belgium, alcoholic beverages and oils and fats have had the largest decreasing effect compared to last month. The most important trends this month are:

Upward: Effect: Downward: Effect:
Travels abroad +0.025 point Airplane tickets -0.095 point
    Hotel rooms -0.080 point
    Holiday villages and campings -0.060 point
    Bread and cereals -0.050 point
    Dairy products -0.040 point
    Meat -0.035 point
    Personal care products -0.035 point
    Confectionery -0.030 point
    Package holidays in Belgium -0.030 point
    Alcoholic beverages -0.025 point
    Oils and fats -0.025 point

Travels abroad have become on average 1.5 % more expensive compared to last month.

Airplane tickets have become on average 12.9 % less expensive this month. Prices for hotel rooms and holiday villages and campings have decreased by 9.7 % and 7.5 %, respectively. Prices for bread and cereals have fallen by 1.6 % on average. Dairy products have become on average 1.9 % less expensive compared to last month. Prices for meat have decreased by 0.8 % on average in September, personal care products and confectionery have also become 2.6 % cheaper compared to last month. Package holidays in Belgium have become on average 8.8 % cheaper this month. Alcoholic beverages were on average 1.4 % less expensive this month. Prices of oils and fats have decreased on average by 5.0 %.

Inflation is now running at 0.80 %, compared to 1.26 % in August and 1.42 % in July. Inflation based on the health index amounted to 0.99 % this month compared to 1.41 % in August and 1.52 % in July. Inflation without energy went down to 1.25 % in September compared to 1.64 % last month and 1.62 % in July. Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 1.40 % in September, against 1.56 % in August and 1.61 % in July.

Food inflation is now running at 0.12 %, compared to 1.72 % last month and 1.04 % in July. Fresh fruit now costs 5.2 % less than in September 2018. Fresh vegetable prices are on the rise: 0.4 % on an annual basis. Fish and shellfish are 1.9 % less expensive than a year ago. On average, non-alcoholic beverages cost as much as in September last year. Alcoholic beverages are 0.1 % less expensive than last year. Tobacco prices have gone up by 5.1 % compared to September last year. Energy inflation is now running at -2.93 %, compared to -2.00 % in August and -0.32 % in July. Electricity is now 0.4 % less expensive than a year ago. Natural gas now costs 12.0 % less than in September 2018. Prices for domestic heating oil, calculated based on a smoothed 12-month moving average, have increased by 6.9 % in one year. Motor fuels are 5.3 % less expensive than last year. Inflation for services has gone down to 1.96 % from 2.05 %. Inflation for rents remains unchanged at 1.02 %.

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

Upward: Inflation:
Postal mail 12.5%
Newspapers 11.8%
Frozen fish 10.1%
Other tobacco products (e.g. loose tobacco) 10.1%
Wine from other fruits (cider) 10.1%
Crisps 7.7%
Frozen vegetables other than potatoes 7.3%
Domestic heating oil 6.9%
Contribution to national health services 6.1%
Food processing appliances (kitchen robot) 5.9%
Software 5.8%
Holiday villages, camping sites and youth hostels 5.7%

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

Downward: Inflation:
Other fuels (LPG) -24.5%
Fresh shellfish -18.7%
Natural gas -12.0%
Frozen shellfish -6.8%
Butter -6.8%
Liquefied petroleum gas (propane) -6.2%
Eggs -5.9%
Petrol -5.7%
Smoked fish -5.3%
Fresh fruit -5.2%
Mobile telephone services -5.1%
Diesel -4.6%

The main group with the largest upward effect[i] on inflation in September was "Hotels, cafés and restaurants" with an effect of 0.15 percentage point. The largest downward effect was measured for "Housing, water and energy" (-0.17 percentage point).

CPI_3graph201909_en.png

The main group with the largest contribution[ii] to inflation is “Hotels, cafés and restaurants” with 0.20 percentage point. The lowest contribution to inflation was registered by the main group "communication", with -0.03 percentage point.

CPI_4graph201909_en.png

Inflation rate

2013 = 100 June July August September
Consumer price index 108.87 108.96 108.94 108.44
Inflation 1.73% 1.42% 1.26% 0.80%
Health index 109.02 109.07 109.07 108.58
Smoothed health index* 106.80 106.81 106.83 106.76
* 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[iii] ) for Belgium amounts to 0.6 % in September. 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)[iv] .


[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.

[iii]The flash estimate of the Belgian HICP is an estimate of the inflation according to the European harmonised index of consumer prices. It is calculated by Statbel based on incomplete data for the reference period and is published by Eurostat at the end of the month. A couple of weeks later, Statbel calculates, based on exhaustive data, the final HICP that will be published by Eurostat and Statbel.

[i]The main conceptual differences between the HICP and the CPI are

  • The weighting of the basket of goods and services in the HICP is mainly based on the national accounts. At lower detailed levels the Household Budget Survey is used. The CPI mostly uses the Household Budget Survey at all levels.
  • The reference population of the HICP consists of private households (including tourists in Belgium) and institutional households (e.g. retirement homes and nursing homes). In the CPI, this population consists of private households with a reference person under a maximum age.
  • The HICP uses the concept of domestic expenditure: expenditure in Belgium by the reference population. The CPI uses the concept of national expenditure: expenditure by the reference population irrespective of the location.
  • Seasonal adjustment is not applied in the HICP, but is applied in the CPI to travels abroad and stays in holiday villages.
  • Sales periods in the CPI are systematically spread over 6 months, but are included in the same month in the HICP.
  • Current prices for domestic heating oil are used in the HICP calculation. A weighted 12-month average is applied in the CPI calculation.
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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