Belgium (Brussels Morning) – Belgium experiences a steep rise in living costs compared to other eurozone countries, driven by energy and food prices.
In Belgium, life became more expensive than almost anywhere else in the eurozone, according to Eurostat figures. In the short term, it’s a stark leap, but over a longer time, Belgium stands out less. While the EU inflation rate declined to 2.6% in February 2024, Belgium’s annual headline pace as measured by the Harmonised Index of Consumer Prices– the EU’s preferred inflation index – stood at 3.61%. This indicates that the cost of living maintained by an average Belgian household was 3.61% more elevated than in the same month a year earlier. This places Belgium in the unenviable European top group.
“This figure is higher than the annual inflation rate of most other countries of the euro area,” Eric Dor, the Director of Economic Studies at the IESEG School of Management, told Media. Only in Croatia, Estonia, Slovakia and Austria did the expense of living rise more snappily year-on-year.
“This could seem unexpected since the annual inflation rate of Belgium in January 2024 was only 1.47%, which was rather small compared to most other governments of the euro area.” In January, the eurozone standard was still 2.8%.
Dor demonstrates that the more recent increase in inflation is due to “base effects”, which refer to the distinction between the annual inflation rates of January 2024 and February 2024. “This is mechanically controlled by the difference between the starting junctures of prices, thus between the price index of January 2023 and the price index of February 2023,” Dor commented. It also relies on the difference between the “arrival points of prices”, thus the contrast between the price index of January 2024 and the price index of February 2024.
“The price index had only risen by 0.26% between January and February 2023, but increased by 2.38% between January and February 2024.” The starting points only grew slightly but the arrival point expanded much more dramatically. This means that the distance between the starting point and the arrival point – the annual inflation rate – increased significantly.
The monthly inflation pace of February 2024 – the rate of growth in harmonised consumption price index costs since the previous month – was loftier for Belgium than for all other governments of the eurozone. The index streamed 2.38% in Belgium between January and February 2024, well forward of second-place Luxembourg (1.66%).
“The main cause is the sharp increase of energy expenses in Belgium by 11% between January and February 2024,” Dor said. The price of gas expanded by 31% in one month while electricity prices also grew 7.7% between January 2024 and February 2024. “This wave results from the progressive displacement of the basic package for electricity and natural gas.” This also influenced the Statbel inflation figure in February. Prices of food, tobacco and restaurant visits also contributed to the raised inflation.
Other economists claim this is the “second-round effect” in the aftermath of the energy problem and the following inflation crisis. In other countries, salaries have adjusted more lately than in Belgium, which can now be recalled in the products people in Belgium buy.
In Belgium, consumption prices have grown by 21% over this period. Across the eurozone nations, this positions Belgium in the middle. However, the rate is much higher than in neighbouring France, where an addition of 15.39% was recorded. In Germany, core costs have gone up 19.1% and in the Netherlands 21.39%. However, the rotation of the price index during the inflationary period is identical among all neighbouring countries, and Belgium’s growth does not stand out dramatically.
