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Belgium Inflation July 2023

Belgium: Harmonized inflation increases in July

Harmonized inflation came in at 1.7% in July, up from June’s 1.6% and increasing for the first time in nine months. The reading—the lowest within the euro zone—was largely driven by stronger price pressures for transport, and hotels, cafés and restaurants, likely hinting at a robust tourism season. Prices for alcoholic beverages and tobacco and communication also rose faster. In contrast, food and non-alcoholic beverages price growth slowed.

Annual average harmonized inflation fell to 6.8% in July (June: 7.6%). Meanwhile, consumer price inflation fell to 4.1% in July, from the previous month’s 4.2%.

Finally, harmonized consumer prices dropped 0.59% over the previous month in July, a sharper drop than June’s 0.10% drop. July’s result marked the weakest reading since April.

Inflation should ease through the end of the year from its July level amid a tougher base of comparison and the lagged effects of the ECB’s hikes. That said, the wage-indexation mechanism will support domestic demand, which together with recent increases in oil and gas prices will limit the inflation fall. A stronger-than-expected tourist season is an upward risk to the outlook.

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