• Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) was running at 9.9% in May compared to 9.3% in March and April.
• Core inflation (inflation without energy and unprocessed food) was running at 4.1% in May, against 3.7% in April.
• The inflation rate based on the consumer price index (CPI) for May stood at 9.0% compared to 8.3% in March and April.
• The sub-indices with the largest upward effect on inflation were gas, electricity, domestic heating oil and motor fuels.
• The sub-indices with the largest downward effect on inflation this month were housing rent, clothing, telecommunication, nursing in hospitals, restaurants and cafés, tobacco, car insurances, meat and pharmaceutical products.
• The harmonised index of consumer prices of May for the EU Member States will be published by Eurostat on 17 June.

The inflation rate based on the European harmonised index of consumer prices (HICP)^[1] was running at 9.9% in May compared to 9.3% in March and April. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)^[2] was running at 11.0% in May, compared to 10.8% in April. 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, amounts to 4.1% in May, compared to 3.7% in April and 3.4% in March. Inflation without energy has increased to 4.1% in May compared to 3.7% last month and 3.5% in March.

The sharp increase in inflation in recent months is due to energy products. Energy has a contribution to inflation^[3] of 6.2%.

Electricity is now 54.4% more expensive than a year ago. Natural gas is 130.6% more expensive on an annual basis. The price of domestic heating oil has risen by 101.8% 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 May was measured for ‘Housing, water, energy’ (33.5%). The lowest inflation rate was recorded for ‘Clothing and footwear’ (-0.6%).

The main group with the largest upward effect on inflation in May was ‘Housing, water, energy’ with an effect on inflation of 4.7 percentage points. The largest downward effect was measured for ‘Health’ with -0.7 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.

• Inflation for energy products increased compared to the previous month. It was running at 65.5% in May, against 62.9% in April and 64.8% in March. Prices increased on average by 3.1% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 46.8%.
• Inflation of processed food rose from 5.2% in April to 6.6% in May.
• Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 5.5% in May compared to 4.1% in April and 4.6% in March. Prices increased on average by 1.0% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 0.3%.
• The inflation rate for non-energy industrial goods was 3.3% in May, a slight increase compared to April when the inflation rate for this aggregate was 3.2%. Prices increased on average by 0.2% compared to the previous month.
• For services (including rent), inflation rises to 3.5% this month, compared to 3.4% in April and 3.2% in March. The average inflation rate of this aggregate for the last twelve months is 2.4%.

Core inflation (inflation without energy and unprocessed food) was running at 4.1% in May, an increase compared to 3.7% in April. Average core inflation over the last 12 months amounts to 2.5%. Prices of this subaggregate increased by 0.5% 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 (2.01 percentage points). Electricity provided an upward effect of 1.63 percentage points. Domestic heating oil provided an effect of 1.03 percentage points. Motor fuels provided a positive impact of 0.72 percentage points.

Sub-indices with the largest upward effect on inflation

The largest downward effect on inflation came from housing rent with an impact of -0.59 percentage points. Clothing had a negative impact of -0.55 percentage points. Telecommunication provided an effect of -0.37 percentage points. Nursing in hospitals had a negative impact of -0.28 percentage points. Restaurants and cafés had a negative impact of -0.27 percentage points. Tobacco provided an effect of -0.21 percentage points. Car insurances and meat had both a negative effect of -0.17 percentage points. Pharmaceutical products had a negative impact of -0.15 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 May. This inflation amounted to 9.9% in May in Belgium. The Netherlands registered an inflation rate of 10.2% in May. This is a decrease compared to 11.2% in April. In France, inflation was 5.8% in May, up from 5.4% in April. In Germany, inflation amounted to 8.7% in May, i.e. an increase compared to an inflation rate of 7.8% in April.

Since the HICP at constant tax rates for May are not yet published by Eurostat, April is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 10.8% in April, up from a rate of 9.9% in March. In April, this inflation in Germany amounted to 7.8%, which is an increase compared to 7.6% in March. In France, inflation was 5.8% in April. This is an increase compared to March, when the inflation rate based on the HICP-CT was 5.5%. In the Netherlands, this inflation rate slightly decreased to 12.8% in April, compared to 12.9% in March.

^[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).