• Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) was running at 2.9% in June compared to 2.8% in May and 3.1% in April.
• Core inflation (inflation without energy and unprocessed food) was running at 2.9% in June compared to 2.8% in May.
• The inflation rate based on the consumer price index (CPI) for June stood at 2.15% compared to 2.01% in May.
• The sub-indices with the largest upward effect on inflation were tobacco, electricity, natural gas, domestic services and restaurants and cafés.
• Most of the downward pressure on inflation this month came clothing, motor fuels and domestic heating oil.
• The harmonised index of consumer prices of June for the EU Member States will be published by Eurostat on 17 July.

The inflation rate based on the European harmonised index of consumer prices (HICP)^[1] was running at 2.9% in June compared to 2.8% in May and 3.1% in April. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)^[2] was running at 2.4% in June, just as in May. The difference in inflation between the HICP and the HICP-CT is largely due to the changes in excise duties on tobacco. These tax changes are not taken into account in the HICP-CT.

Core inflation, which does not take into account price evolutions of energy products and unprocessed food, was running at 2.9% in June, compared to 2.8% in May and 3.0% in April. Inflation without energy amounts to 2.9% compared to 2.7% in May.

Inflation for food and non-alcoholic beverages now stands at 3.0% compared to 2.6% in the previous month. Oil inflation amounts to 3.9% this month, compared to 4.3% in May. Inflation for dairy products slightly increased from 3.2% last month to 3.3%. Fish inflation amounts to 1.5% this month, compared to 0.0% in May. Inflation for bread and cereals amounts to 2.1% in June, down from the 2.5% registered in May. Meat inflation amounts to 4.4% this month, compared to 3.2% in May.

The contribution of energy to inflation is now 0.3%, a slight decrease compared to the previous month (0.4%). Food products provide a contribution of 0.4%.

Electricity is now 11.4% more expensive than a year ago. Natural gas registers an inflation rate of 6.2% compared to June last year. The price of domestic heating oil has fallen by 12.1% compared to last year.

Inflation and impact of the 12 main groups on inflation

Based on the breakdown into 12 main groups, the highest inflation rate in June was measured for “Alcoholic beverages and tobacco” (10.9%). The lowest inflation rate was measured for “Clothing and footwear” (-2.4%). The group “Housing, water and energy” was, with 0.5 percentage points, the main group with the largest upward effect on inflation in June. The largest downward effect was measured for “Transport” with -0.4 percentage points.

Inflation^[3] and effect^[4] on inflation for the overall HICP and 12 main groups

Inflation according to specific aggregates

The overall HICP can be broken down into five specific aggregates which together form the total expenditure.

• Inflation for energy products decreased compared to the previous month. It was running at 2.2% in June compared to 2.9% in May and 4.3% in April. Prices increased on average by 0.8% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 11.6%.
• Inflation for processed food products amounts to 5.5% in June, just like in May. Prices increased by 0.5% on average compared to the previous month. The average inflation rate for the last twelve months is 6.4%.
• Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 3.0% in June compared to 1.3% in May and 1.9% in April. Prices increased on average by 0.9% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 2.0%.
• Inflation for non-energy industrial goods was running at 0.0% in June compared to -0.1% in May and 0.2% in April. Prices increased by 0.4% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 0.4%.
• For services (including rent), inflation remains stable at 3.5% as in May. The average inflation rate of this aggregate for the last twelve months is 3.9%. Prices increased on average by 0.4% compared to the previous month.

Core inflation (inflation without energy and unprocessed food) was 2.9% in June. This is a slight increase compared to 2.8% in May. The average core inflation over the last 12 months amounts to 3.3%. Prices of this subaggregate increased by 0.4% on average compared to the previous month.

Inflation according to specific aggregates

Effect of sub-indices on inflation

With 0.46 percentage points, tobacco has the largest upward effect on inflation. Electricity and natural gas had a positive impact of 0.31 and 0.14 percentage points respectively. Domestic services had a positive effect of 0.13 percentage points. Finally, restaurants and cafés had a positive impact of 0.11 percentage points.

Sub-indices with the largest upward effect on inflation

The largest downward effect on inflation came from clothing (-0.31 percentage points). Motor fuels had a downward effect of -0.26 percentage points. Domestic heating oil had a negative impact of -0.18 percentage points.

Sub-indices with the largest downward effect on inflation

Comparison with neighbouring countries

Since the final HICP of the neighbouring countries will not be published until later, comparisons can only be made based on the first HICP flash estimate for June. In Belgium, the HICP was 2.8% in June: it remains stable compared to May. The Netherlands registered an inflation rate of 2.8% in June; a slight decrease compared to an inflation rate of 2.9% in May. In France, this inflation rate increased to 0.8% in June compared to 0.6% in May. The first HICP flash estimate for June in Germany was 2.0%, a slight decrease compared to May, when it stood at 2.1%.

Since the HICP at constant tax rates for June are not yet published by Eurostat, May is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 2.4% in May, down from a rate of 2.6% in April. Inflation in Germany in May amounted to 2.0%, slightly down from 2.1% in April. This inflation in France decreased to 0.3% in May, down from 0.6% in April. This inflation rate in the Netherlands went down from 3.5% in April to 2.3% in May.

^[1] In addition to the national consumer price index (CPI), Statbel also calculates a European harmonised consumer price index (Harmonised Index of Consumer Prices, HICP). The HICP is used to compare inflation rates in the EU Member States. To this end, the applied expenditure approach and methods have been coordinated as much as possible and laid down in European regulations. The results of the CPI and HICP are not the same. This is mainly due to a different weighting and composition of the basket of goods and services on which these indices are based.

The HICP is also used by the European Central Bank in its monetary policy. Additionally, the HICP is used to determine to what extent a Member State meets the inflation criteria set in the Treaty on European Union.

Differences between the HICP and the current 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 currently 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 have been neutralised in the CPI , 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.

^[2] The HICP-CT is calculated in the same way as the regular HICP, but the prices in this index are calculated based on constant tax rates. This index therefore reflects the theoretically potential effect of changes in indirect tax rates (such as VAT or excise duties) on measured inflation. However, this is a theoretical effect, since it presupposes that tax changes are immediately and entirely reflected in prices paid by consumers.

^[3] Inflation on annual basis measures the price changes between the current month and the same month of the year before. A 12-month average compares the average HICP of the last 12 months with the average of the previous 12 months. A monthly change compares the price levels of the last two months.

^[4] The effect on inflation shows the changes on the inflation rate by including the sub-index in the HICP. The effect not only takes the weight of the sub-index into account, but it also takes into account whether the sub-index inflation is higher or lower than that of the total expenditure (overall HICP).