Credit: STATEC

On Wednesday 6 September 2023, Luxembourg's statistical institute, STATEC, announced that the annual inflation rate had risen to 4.2% (up from 3.7% one month earlier).

STATEC attributed this increase mainly to the end-of-summer sales. By neutralising the variations due to sales and excluding petroleum products, the prices of other goods and services increased by 0.3%. This development triggered an wage indexation resulting in a 2.5% increase in wages, salaries and pensions from 1 September 2023.

The return of the prices of products on sale during the month of July to their normal level explained the monthly increase of 13.9% in the clothing and footwear division. Compared to August 2022, the prices of clothing rose by 6.6% and those of shoes by 6.3%. Other headings also impacted by the end-of-summer sales were furniture (+2.0%) and textile household articles (+2.8%).

For the third consecutive month, the trend for the prices of petroleum products is on the rise. In August, the price of diesel increased by 10.0% and the price of petrol increased by 6.2%. A full tank thus cost 19.1% more than during the previous month. Despite this cost increase, the prices of petroleum products nevertheless remained 1.3% lower than in the same month last year.

With the peak of the summer season, package holiday prices increased by 8.8% and airline ticket prices rose by 12.4% in one month.

Food prices continued their upward trend with 0.4% compared to July 2023. The biggest increases were seen for olive oil (+5.1%), frozen vegetables (+3.9%) and baby food (+3.5%). However, the price of whole milk (-2.6%), butter (-1.7%) and mineral water (-0.7%) fell, noted STATEC. In annual comparison, overall food prices were 9.9% higher.

The annual inflation rate stood at 4.2%, up from 3.7% a month earlier. The underlying annual inflation rate fell by 0.4% and stood at 4.5% in August 2023. The general index for the month of July expressed in base 100 in 2015 amounted to 121.65 points.

The half-yearly average of the index connected to the 1.1.1948 base went from 984.78 to 989.04 points and thus exceeded the threshold for triggering a wage indexation which was set at 988.75.

In accordance with the legislation in force, the application of a wage indexation takes place the month following its initiation. Consequently, the new application rating of the sliding salary scale of 944.43 points (up from 921.40 points) came into force on 1 September 2023, resulting from this date in a 2.5% increase in wages, salaries and pensions.