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Belgium Inflation March 2023

Belgium: Harmonized inflation drops to lowest level since September 2021 in March

Harmonized inflation dropped to 4.9% in March from February’s 5.4%. March’s result represented the weakest inflation rate since September 2021. The headline disinflation was driven by declining energy prices; they detracted from the reading by falling 2.9%. Additionally, looking at the details of the release, housing and utilities prices fell at a quicker pace in March compared to the previous month, while price pressures for transportation eased.

Accordingly, the trend pointed down, with annual average harmonized inflation coming in at 9.5% in March (February: 9.9%). Meanwhile, consumer price inflation ticked up to 6.7% in March from the previous month’s 6.6%.

Finally, harmonized consumer prices rose 0.19% over the previous month in March, moderating from February’s 0.26% rise.

Although monthly consumer price increases and headline inflation softened in March, core inflation continued to gather pace: It reached 8.6% in March from 8.5% in February. This suggests that prices will remain sticky for an extended period of time. In turn, our panelists forecast that inflation should remain above the ECB’s 2.0% target range until 2025.

Commodity price swings and wage increases—due to the consequences of the automatic wage indexation mechanism on inflation expectations—are the main upside risks.

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