Annual Inflation Drops to 2.3%; Wages, Pensions Rise by 2.5%

On Wednesday 3 June 2026, Luxembourg's national statistical institute, STATEC, reported that the annual inflation rate fell to 2.3% in May 2026, down from 3.1% in April.

In May, the national consumer price index fell compared to the previous month. STATEC attributed the slowdown in annual inflation primarily to lower energy prices and a more moderate increase in service prices.

Energy prices fell by 2.5% compared to April. According to STATEC, this decline was largely driven by heating oil prices, which dropped by 10.7% during the month after rising by 23.0% in April. Fuel prices also fell by 1.4% over one month. Despite these monthly decreases, energy prices remained significantly higher than a year earlier, rising by 16.1% compared to May 2025. Heating oil prices were up 62.9% year-on-year, while fuel prices increased by 29.2%.

At the pump, the price of diesel fell by 7.1% compared to April, whereas petrol prices rose by 4.2%. Meanwhile, gas prices increased by 2.5% and electricity prices remained unchanged.

The food category, including alcohol and tobacco, recorded an annual increase of 2.1%. Fruit vegetables (+11.5%), chocolate (+7.9%) and coffee (+6.3%) saw some of the strongest annual price increases. By contrast, cereal prices fell by 3.3% and ice cream prices declined by 2.7%. Alcoholic beverage prices fell by 0.4% over one month, mainly due to lower wine prices, although annual prices remained broadly stable.

Service prices increased by 1.3% year-on-year, compared to 2.3% in April. STATEC noted that this slowdown was largely linked to the index-linked adjustments introduced in May 2025, which no longer contributed to annual price growth this month.

Seasonal effects were also visible in several service categories. Airfares rose by 21.4% compared to April, although they remained 7.7% lower than a year earlier. Fees for crèches and after-school childcare centres fell by 6.5%, while bundled telecommunications services recorded an increase of 11.8%.

The category of non-energy industrial goods rose by 0.5% year-on-year. The largest annual increase was recorded for water supply (+10.4%). Prices also increased for kitchenware and utensils (+4.7% month-on-month), while prices fell for certain information and communication accessories (-10.9%) and other major durable recreational goods (-6.7%).

The all-items index excluding energy fell from 1.9% in April to 1.2% in May. The all-items index for May, expressed on a 2025 base of 100, stood at 102.48 points.

STATEC reported that the six-month average of the index linked to the 1 January 1948 base rose from 1,038.35 to 1,041.62 points, exceeding the trigger threshold of 1,038.79 points. In accordance with current legislation, a new index tranche took effect on Monday 1 June 2026, resulting in a 2.5% increase in wages, salaries and pensions.

STATEC will publish an initial estimate of the annual inflation rate at the end of June. The final June figures will be published on 8 July 2026 following the monthly meeting of the Index Committee.