• Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) slightly increased to 4.5% in October compared to August and September when it stood at 4.3%.
• Core inflation (inflation without energy and unprocessed food) stood at 3.7% in October compared to 3.6% in September.
• The inflation rate based on the consumer price index (CPI) for October stood at 3.2% compared to 3.1% in September.
• The sub-indices with the largest upward effect on inflation were natural gas, tobacco and electricity.
• On the other hand, motor fuels, domestic heating oil and meat had the largest downward effect on inflation this month.
• The harmonised index of consumer prices of October for the EU Member States will be published by Eurostat on 19 November.

The inflation rate based on the European harmonised index of consumer prices (HICP)^[i] slightly increased to 4.5% in October, compared to 4.3% in August and September. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)^[ii] was running at 3.5% in October compared to 3.3% in September and August. The difference in inflation between the HICP and the HICP-CT is largely due to higher excise duty on tobacco and natural gas. Indeed, these modifications to taxation 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 3.7% in October, compared to 3.6% in September and 3.7% in August. Inflation without energy followed the same trend, rising to 3.7% in October compared to 3.6% in September.

Inflation for food products and non-alcoholic beverages amounts to 2.4% this month versus 1.6% the previous month. Inflation for oils stands this month at 11.0% compared to 6.7% in September. For dairy products, inflation is now
-0.1% compared to -0.7% the previous month. Fish registers this month an inflation rate of 1.9% compared to 2.1% in September. For bread and cereals, inflation increase to 1.2% this month compared to 0.0% last month. Inflation for meat amounts to 2.0% in October compared to 1.7% in September.

The contribution of energy to inflation has been negative from January 2023 to February 2024. It now amounts to 1.2% and slightly increases compared to the previous month, when it stood at 1.1%. As described below, energy inflation increases. This is not an increase in energy cost, but a consequence of the extinction of the 12-month impact of the basic packages in the index. Food products provide a contribution of 0.4%.

Electricity is now 13.7% more expensive than a year ago. Natural gas is 125.4% more expensive than in October last year. Domestic heating oil prices have gone down by 22.2% 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 October was measured for “Alcoholic beverages and tobacco” (19.6%). The lowest inflation rate was measured for “Transport” (-1.1%). The main group with the largest upward effect on inflation in October was “Housing, water and energy” with an effect of 1.5 percentage points. The largest downward effect was measured for “Transport” (-0.7 percentage points).

Inflation^[iii] and effect^[iv] 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 slightly increased compared to the previous month. In October, it amounted to 11.9% compared to 11.0% in September and 11.2% in August. Prices decreased by 0.3% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 3.1%.
• Inflation for processed food products increased to 7.4% in October, compared to 6.2% in August and September. Prices have increased by 0.8% on average compared to the previous month. The average inflation rate for the last twelve months is 5.7%.
• Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 3.1% in October compared to 2.9% in September and 1.9% in August. Prices increased by 0.8% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 3.6%.
• Inflation for non-energy industrial goods was running at 1.1% in October, compared to 1.3% in September and 1.4% in August. On average, prices have increased by 0.7% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 2.0%.
• Inflation for services (including rents) slightly decreased to 3.9% in October versus 4.0% in August and September. The average inflation rate of this aggregate for the last twelve months is 4.7%.

Core inflation (inflation without energy and unprocessed food) stood at 3.7% in October. This is a slight increase compared to the 3.6% rate registered in September. Average core inflation over the last 12 months amounts to 4.1%. Prices of this subaggregate have increased by 0.6% on average 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 natural gas (1.52 percentage points). Tobacco had an impact of 0.82 percentage points. Finally, electricity had an effect of 0.28 percentage points.

Sub-indices with the largest upward effect on inflation

The largest downward effect on inflation came from motor fuels (-0.56 percentage points). Domestic heating oil provided a negative effect of -0.50 percentage points. Finally, meat had a negative effect of -0.11 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 October. This inflation in Belgium in October amounted to 4.7%, an increase compared to the rate of 4.3% observed in September. The Netherlands registered an inflation rate of 3.3% in October, which remains stable compared to September. Inflation in France slightly increased from 1.4% in September to 1.5% in October. The first HICP flash estimate for October in Germany was 2.4%, an increase compared to September when it was 1.8%.

Since Eurostat did not yet publish the harmonised index of consumer prices at constant tax rates for October, September is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 3.3% in September, remaining stable compared to the inflation rate observed in August. This inflation in Germany in September amounted to 1.3%, a decrease compared to the rate of 1.6% observed in August. Inflation in France has decreased to 1.1% in September from 1.8% in August. In the Netherlands, this inflation is in September at the same level as in August: 2.3%.

^[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).