Luxembourg inflation increases to 2.5% as summer sales end

Annual inflation in Luxembourg increased to 2.5% in August from 2.3% as many countries around the world face increased prices as the global economy emerges from the pandemic slump.

Month on month, inflation increased by 1% in August compared to July, the country's national statistics office Statec said on Wednesday. The increase in price was driven by clothing prices due to the end of summer sales in July, Statec said. 

Core inflation, which excludes the more volatile prices of some agriculture produce and petrol, only went up by 0.1% to 1.3% annually, Statec noted.

Price gains are on the up across many developed economies, from the US to Australia, as strong consumer demand, and worker and material shortages cause higher inflation.

The European Central Bank's inflation target used to be "close to, but below 2%" until recently. In July, the central bank opted for a more flexible approach, allowing prices to overshoot the target from time to time.

Prices for foodstuffs have gone up in Luxembourg, with Statec identifying the highest increases for seafood, olive oil and fresh fruit, whereas eggs and rice have gone down.

Petroleum product prices mildly decreased by 0.2% compared to July, driven by heating oil decreases, whereas diesel and petrol experienced increases month on month.

Compared to a year ago, however, drivers now have to pay close to 30% more to fill up. In 2020, petrol prices reached exceptional lows due to the Covid-19 restrictions putting a halt to many economic activities.

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.