Harmonized inflation eased to 8.6% in August from 9.3% in July, marking the second consecutive month of a downtrend and suggesting that harmonized inflation has peaked in Luxembourg. The print was chiefly driven by softer price increases for housing, water, electricity, gas and other fuels, transport, and restaurants and hotels. Prices for food and non-alcoholic beverages, and recreation and culture rose at a steeper pace, however.
Despite the headline moderation, the trend pointed upwards as annual average inflation rose to 7.3% in August from 6.9% in July. Meanwhile, consumer price inflation was stable at July’s 6.8% in August.
On a monthly basis, harmonized consumer prices rose 0.42% in August, swinging from July’s 1.33% drop.
Analysts at the EIU added:
“Ongoing supply-chain issues and high energy prices in Europe contributed to price growth. We expect inflation to accelerate to 8.5% in 2022 as supply-side pressures intensify owing to material shortages and the rising cost of fuel. Luxembourg’s average inflation in 202223, at 7%, will be slightly higher than in the euro zone (6.3%), driven largely by high energy prices.”
FocusEconomics Consensus Forecast panelists project harmonized inflation to average 7.7% in 2022. In 2023, they see harmonized inflation averaging 3.1%.