July 21, 2024

Taylor Daily Press

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We are past peak inflation, and the Planning Office expects it to subside significantly next year

We are past peak inflation, and the Planning Office expects it to subside significantly next year

Inflation will still be above 10 percent in December, but will clearly fall below this level from January onwards. That’s what the planning office expects on Tuesday. The annual inflation rate is expected to be 5.3% in 2023.

source: Belgium

The peak of inflation is behind us. The peak was reached in October, as predicted by the planning office, when consumer prices rose 12.27 percent in one year. In November, inflation weakened to 10.63 percent, and in December, the tables will still show 10.31 percent, the planning office believes. Thus, annual inflation will reach 9.6% (against 2.44% in 2021 and 0.74% in 2020).

Inflation should subside significantly next year. The Planning Office expects 7.80 percent in January and rates between 6 and 8 percent during the first half of the year. After that, inflation will drop further to around 2% in the fall. Thus, annual inflation in 2023 will still be 5.3 percent.

The European Central Bank (ECB) aims for an inflation rate of around 2% over the medium term.

The Planning Office maintains its previous forecast that the central index will be overtaken again next year. It is now based on April, a month earlier than previously forecast. After one month of this overrun, social benefits increase by 2 percent, and the wages of government employees follow after another month.

Due to high inflation, the central index was exceeded five times in 2022, the last time in November, which each time led to the indexation of social benefits and wages of civil servants.

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Most wages in Belgium are automatically adjusted for the rising cost of living, but there are differences by sector. For government employees, this happens every time the central indicator is exceeded, while in other sectors the adjustment is made monthly, quarterly, or once a year.