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Luxembourg Inflation February 2023

Luxembourg: Harmonized inflation falls to over one-year low in February

Harmonized inflation came in at 4.8% in February, down from January’s 5.8%. February’s figure represented the lowest inflation rate since January 2022. The slowdown was driven by easing price pressures for housing and utilities, and transport. That said, food and non-alcoholic beverages inflation continued to rise for the 17th consecutive month.

Accordingly, annual average harmonized inflation edged down to 8.0% in February (January: 8.2%). Meanwhile, consumer price inflation fell to 4.3% in February from the previous month’s 4.8%.

Finally, harmonized consumer prices rose 1.41% over the previous month in February, swinging from the 0.26% drop logged in January. February’s uptick marked the sharpest increase in prices since June 2022.

Looking ahead, inflation should continue to ease this year on a stronger base effect and weaker domestic demand. Moreover, supply-chain issues should ease, and commodity prices should moderate from last year. That said, the salary and benefits inflation-indexation mechanism will be triggered in April, and likely again in Q4. Salaries and state benefits rise by 2.5% each time the mechanism is triggered, posing an upside risk to inflation.

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