Luxembourg: Harmonized inflation declines to lowest level since January 2022 in December
Harmonized inflation dropped to 6.2% in December, below November’s 7.3%. December’s reading marked the weakest inflation rate since January 2022. The decline was driven by moderating price pressures for transportation and housing and utilities.
The trend pointed up slightly, with annual average harmonized inflation coming in at 8.2% in December (November: 8.1%). Meanwhile, consumer price inflation fell to 5.4% in December, from the previous month’s 5.9%.
Finally, harmonized consumer prices decreased 1.41% over the previous month in December, below the 0.68% fall logged in November. December’s result marked the sharpest fall in prices since January 2016.
Looking ahead, inflation should continue to ease in 2023 on a tougher base effect and weak domestic demand. That said, the salary and benefits inflation-indexation mechanism will be triggered in Q1 2023, again in April, and likely for a third time in Q4. Salaries and state benefits rise by 2.5% each time the mechanism is triggered, which could stimulate inflation upwards.