The national statistics institute STATEC has published its latest inflation forecast report, in which it predicts a wage indexation for the fourth quarter (Q4) of 2023.
STATEC has maintained its inflation forecast at 3.4% for 2023 and anticipated a wage indexation in Q4 2023. The statistics institute noted that consumer prices have been slowing since October 2022 due to tripartite measures which should make it possible to contain inflation this year. In 2024, inflation is expected to reach 4.8%, a rebound resulting mainly from gas and electricity prices which would once again reflect real purchase prices on wholesale markets. Another wage indexation is also foreseen for the second quarter of 2024.
Core inflation, on the other hand, has kept a steady pace, remaining above 3% in 2023. According to STATEC, this stems from the delayed impact of runaway energy prices in 2022. Consequently, food products and non-energy industrial goods continue to get more expensive. The statistics institute has thus revised core inflation slightly upwards to 3.9% in 2023 (compared to the previous prediction of 3.7%) and 4.3% in 2024.
Regarding the foreseen wage indexation for Q4 2023, this would be in addition to that of 1 February 2023 and the one postponed from June 2022 to April 2023.
In the eurozone, owing to a slowdown in energy prices, headline inflation has been falling since October 2022, while core inflation continues to accelerate. Despite the tightening of monetary policy, the main international institutions are still anticipating inflation in the eurozone above 2% in 2023 and 2024. According to STATEC, the downward effects of an appreciation of the euro and a fall in the price of Brent (crude oil) on inflation should be offset by the recent surge in the prices of food products and services in the eurozone, which also have repercussions on consumer prices in the Grand Duchy.
Luxembourg's Ministry of State noted in a related press release that, following these economic developments and as stipulated in the "Solidaritéitspak 2.0" tripartite agreement, Prime Minister Xavier Bettel will convene a new tripartite coordination committee meeting in the coming weeks to discuss the following two points:
- the tripartite agreement of 28 September 2022 provides that in the event that STATEC establishes in 2023 that an end to the measures would cause an inflationary shock at the beginning of 2024, the government undertakes to convene a new tripartite meeting to examine and organise a possible phasing out of the end of the measures;
- the government will take advantage of the organisation of this meeting to discuss with its social partners the terms of compensation for the probable additional wage indexation which will be applied entirely to the benefit of private households.