Change Edition

Inflation drops sharply in Luxembourg, now lowest in EU

Inflation drops sharply in Luxembourg, now lowest in EU

by Yannick HANSEN 01.02.2023
Luxembourg has the joint-lowest inflation rate in the eurozone at 5.8%
Photo credit: Pierre Matgé

Luxembourg's annual inflation rate was the joint-lowest in the eurozone in January after dropping sharply from the end of last year, as unemployment levels remained stable, according to new data from the EU's official statistics agency Eurostat on Wednesday.

Year-on-year, prices rose by 5.8% in January, Eurostat said, a drop of 0.4 percentage points compared to December. That gives the Grand Duchy the lowest inflation rate in the 20-member zone of countries using the euro, together with Spain.

The new figures mean Luxembourg's current inflation rate is nearing the levels it had in January 2022 - before the war in Ukraine caused already rising energy prices to skyrocket - when it stood at 4.6%.

Annual inflation across the eurozone stood at 8.5% in January this year, down by 0.7 percentage points. Inflation dropped in all but six countries using the common currency, according to Eurostat.

Despite falling inflation, all wages and pensions in Luxembourg are set to rise by 2.5% from February, the national statistics agency Statec said on Tuesday, as general price rises have crossed the necessary threshold to trigger the collective pay bump.

Energy is expected to have the highest annual rate in January - 17.2%, compared with 25.5% in December - followed by food, alcohol & tobacco, which registered price rises of 14.1%, compared with 13.8% in December, Eurostat said.

Unemployment in Luxembourg remained stable at 4.6% in December compared to the previous month, Eurostat also said, while the number of people seeking work also remains unchanged in both the eurozone and the wider EU.

The new data comes as the economies of the eurozone grew by 0.1% in the last quarter of 2022, according to separate figures published by Eurostat on Tuesday, defying estimates by economists which had forecast a contraction of 0.1%. 

While German and Italian output shrank by 0.2% and 0.1% compared to the previous quarter, France and Spain recorded an expansion of 0.1% and 0.2% respectively. Eurostat did not publish any Luxembourg-specific data.

The Luxembourg Times has a new mobile app, download here! Get the Luxembourg Times delivered to your inbox twice a day. Sign up for your free newsletters here.

More on this topic