On 16 September 2015, the 'formation des prix' of the Conseil de la Consommation met as part of the study and analytic discussion of pricing of the Observatoire de la Formation des Prix of the Ministry of Economy.
The Observatoire, composed of representatives of consumers, employer organisations and the government, presented a new edition of its biannual report for the first half of 2015, containing an analysis of the evolution of inflation in Luxembourg; a comparison of inflation with neighburing countries; and an analysis of changes in administered prices.
The report also highlighted several methodologies to estimate the impact of VAT increase, from the beginning of 2015, on inflation and consumer prices.
General inflation was found to have continually declined in the first half of 2015, with the average rate rising to 0.26% in Luxembourg.
The inflation, as previously reported by Chronicle.lu, was influenced by the two opposing factors of a collapse in oil prices, exerting a strong downward pressure on the inflation in rate in Luxembourg and further afield; whilst the rise of 2 percentage points in different VAT rates led to an upward pressure on prices.
At an international level, Luxembourg inflation rate was found to be higher than its neighbouring countries, albeit by a marginal difference. For example, Belgium holds an inflation rate of 0.16%, Germany 0.13% and France is in the midst of a virtual stagnation of prices at 0.01%.
However, the report indicated that, for methodological reasons, inflation comparisons must be reviewed with caution as multiple factors come into play.
Photo by STATEC
