Luxembourg Sees Softer Prices, Inflation Forecast at 1.8%

Luxembourg’s national statistics office (STATEC) has released new inflation forecasts showing that consumer price growth is expected to ease to about 1.8% in both 2026 and 2027. This follows a sharp drop in the inflation rate at the beginning of 2026, largely driven by declining energy costs and government measures to reduce electricity prices, which helped bring annual inflation to lower levels earlier this year.

STATEC noted that underlying inflation — which excludes volatile items such as energy — is projected to remain elevated at around 2.2% in 2026 due to continued rises in food and services prices. Experts point out that unfavourable weather conditions and supply-side factors could contribute to higher food inflation risks before moderating in 2027.

The forecast also suggests that wage indexation — a mechanism that adjusts wages based on changes in consumer prices — may be triggered in the second quarter of 2026 if average inflation remains around the projected level. Such adjustments could support consumer purchasing power but also have implications for labour costs and business planning.

Analysts highlight that the slower inflation outlook reflects broader trends seen in European economies, where falling energy prices and subdued price pressures have contributed to a general easing of inflationary forces across the region.

While headline inflation is forecast to stay below 2%, policymakers and economists will continue to watch price developments in services and food sectors closely, as these are key drivers of inflation experienced by households.

👉 Read more: https://statistiques.public.lu/fr/actualites/2026/stn05-previsions-inflation.html

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