• Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) stood at 10.2% in December compared to 10.5% in November and 13.1% in October.
• Core inflation (inflation without energy and unprocessed food) stood at 7.1% in December compared to 6.8% in November.
• The inflation rate based on the consumer price index (CPI) for December stood at 10.4% compared to 10.6% in November.
• The sub-indices with the largest upward effect on inflation were gas, electricity, dairy products, bread and cereals, meat, vegetables as well as domestic heating oil.
• However, the sub-indices with the largest downward effect on inflation this month were housing rent, telecommunication, nursing in hospitals, restaurants and cafés, furniture, motor fuels and clothing.
• The harmonised index of consumer prices of December for the EU Member States will be published by Eurostat on 18 January.

The inflation rate based on the European harmonised index of consumer prices (HICP)^[1]  stood at 10.2% in December compared to 10.5% in November and 13.1% in October. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)^[2]  was 11.7% in December, compared to 11.8% in November. The difference in inflation between the HICP and the HICP-CT is largely due to the temporary VAT reduction for electricity and gas. These price 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, stood at 7.1% in December, compared to 6.8% in November and 6.3% in October. Inflation without energy soared to 7.5% in December, compared to 7.1% in November and 6.5% in October.

Food inflation now stands at 15.4% compared to 15.3% last month. This inflation has sharply increased in recent months. In December 2021, it was still 1.4%. Inflation for oils, fish, dairy products, bread and cereals and meat has sharply increased in recent months. Inflation for oils stands this month at 29.7%. In December last year, it was still 5.8%. For dairy products, inflation is now 22.6% compared to 1.5% in December 2021. Fish registers this month an inflation rate of 12.9%. In December last year, it was still 1.8%. For bread and cereals, inflation stands at 17.1% this month compared to 2.2% in December 2021. Meat inflation amounts to 13.4% this month compared to 1.1% in December last year.

The sharp rise in inflation in recent months is largely due to energy products. Energy has a contribution to inflation^[1]  of 3.6%. Food products provide a contribution of 2.6%.

Electricity is now 35.5% more expensive than a year ago. Natural gas is 73.1% more expensive on an annual basis. Domestic heating oil prices have gone up by 21.7% compared to last year.

Inflation and effect on inflation for the 12 main groups

Based on the breakdown into 12 main groups, the highest inflation rate in December was measured for “Housing, water and energy” (22.6%). The lowest inflation rate was measured for “Communications” (-0.3%).
The main group with the largest upward effect on inflation in December was “Housing, water and energy” with an effect of 2.6 percentage points. The largest downward effect was measured for “Health” (-0.6 percentage points).

Inflation^[4] and effect^[5] 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.

• The inflation rate for fuels and energy sources decreased compared to the previous month. In December, it amounted to 33.0% compared to 37.8% in November and 69.2% in October. Prices declined by 7.3% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 59.0%.
• Inflation for processed food products stood at 13.1% in November, compared to 13.5% in December. In October, it was 11.6%. Prices increased by 0.7% on average compared to the previous month. The average inflation rate for the last twelve months is 8.4%.
• Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 13.5% in December compared to 14.4% in November and 11.8% in October.
• Prices increased on average by 0.5% compared to November. The average inflation rate of this aggregate for the last twelve months is 7.6%.
• The inflation rate for non-energy industrial goods was 6.4% in December, an increase compared to November when the inflation rate for this aggregate was 6.0%. Prices increased by 1.2% on average compared to the previous month.
• For services (including rent), inflation slightly increased this month to 4.8%, compared to 4.5% in November. The average inflation rate of this aggregate for the last twelve months is 3.8%.

Core inflation (inflation without energy and unprocessed food) was running at 7.1% in December, an increase compared to 6.8% in November. Average core inflation over the last 12 months amounts to 4.9%. Prices of this subaggregate have increased by 0.9% compared to the previous month.

Inflation according to specific aggregates

Effect of sub-indices on inflation

The largest upward effect on inflation was caused by gas (1.48 percentage points). Electricity provided an upward effect of 1.02 percentage points. Dairy products had an impact of 0.25 percentage point. Bread and cereals one positive impact of 0.23 percentage point. Meat, vegetables and domestic heating oil all had an impact of 0.14 percentage point.

Sub-indices with the largest upward effect on inflation

The largest downward effect on inflation came from rent (-0.42 percentage points). The negative effect of telecommunications and nursing in hospitals amounted to -0.39 and -0.23 percentage points, respectively. Restaurants and cafés had an effect of -0.19 percentage points. Furnitures had one negative impact of -0.17 percentage point. Motor fuels and clothing had both one negative impact of -0.15 percentage point.

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 December. This inflation amounted to 10.2% in December in Belgium. The Netherlands registered an inflation rate of 11.0% in December. This is a slight decrease compared to the 11.3% rate registered in November. In France, inflation was 6.7% in December, which is also a slight decrease compared to the 7.1% registered in November. Inflation in Germany in December amounted to 9.6%, down from the rate of 11.3% observed in November.

Since the HICP at constant tax rates for December are not yet published by Eurostat, November is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 11.8% in November, down from a rate of 14.8% in October. In November, this inflation in Germany was running at 11.7%, slightly down from the rate of 12.0% registered in October. In November, inflation in France remained stable at 7.5%. In the Netherlands, inflation decreased to 14.1% in November. In October, this inflation was 20.0%.

^[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] 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.

^[4] 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.

^[5] 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).