Fuel prices drive increase in monthly inflation

There was a small increase in inflation in Luxembourg prices in June, mainly caused by the continuing rise in oil and petrol prices, according to a report by Luxembourg’s statistics agency Statec on Wednesday.

Inflation rose 0.2% between May and June, largely driven by a 1.6% jump in fuel prices, which have been on the increase almost every month for the past year.

Fuel and heating oil rose by 3.2% in June, with diesel increasing by 2.2% and petrol 0.9%. Compared to June 2020, Statec noted, the cost of oil-based products have skyrocketed by more than 28%.

Although differences over the past month have been marginal, some areas of daily life have seen large increases in the last year, with water, electricity and accommodation costs climbing by almost 5% compared to last June.

The annual inflation rate has been estimated at 2.2%, a downward revision from the 2.5% forecast by Statec a month earlier.

Workers' salaries could rise by 2.5% by the end of the year to match inflation, the national statistics agency said in May. The automatic wage indexation happens every time prices for consumer goods and services jump by more than a certain threshold, normally 2.5%. Introduced in 2006, the measure last kicked in at the start of 2020.

Luxembourg’s minimum wage increased by 2.8% at the start of the year, despite strong criticism from business groups. The basic minimum gross monthly salary for unskilled workers currently stands at €2,201.93, rising to €2,642.32 for employees with qualifications.  

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