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Belgium Inflation May 2023

Belgium: Harmonized inflation falls to lowest level since July 2021 in May

Harmonized inflation came in at 2.7% in May, down from April’s 3.4%. May’s figure marked the lowest inflation rate since July 2021. Looking at the details of the release, prices for food and transport rose at a softer pace in May while prices for housing and utilities contracted.

In addition, the trend pointed down, with annual average harmonized inflation coming in at 8.3% in May (April: 9.0%). Meanwhile, consumer price inflation fell to 5.2% in May, from the previous month’s 5.6%.

Lastly, harmonized consumer prices increased 0.21% over the previous month in May, swinging from April’s 1.25% fall.

That said, core inflation rose to 8.4% in May from 8.1% in April. The figure for core inflation is suggesting that prices will remain sticky for an extended period of time, which could discourage the ECB to loosen quickly its tightening cycle.

In the long-run, our panelists forecast that average inflation will remain above the ECB’s 2.0% target range until 2025.

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

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