Inflation in Belgium rose to 6.67% this month, up from 6.62% in February — the first increase since inflation peaked at 13.1% in October last year.
According to a report published on Thursday by Statbel, Belgium's official statistics office, the uptick in inflation was largely a consequence of rising food prices. Food inflation is now running at 17.02%, up from 16.12% in February. Food currently contributes 3.12 percentage points to the headline inflation rate.
Statbel also noted that the largest downward inflationary pressure stemmed from declining energy prices, which in turn were precipitated by this year's unseasonably warm weather. Energy inflation is now heavily negative at -10.11%, compared to -7.93% last month and 5.21% in January. Energy's contribution to the headline inflation rate is also negative (-1.49 percentage points).
Core inflation continues to rise
Worryingly, the report noted that Belgium's core inflation rate — which strips out the impact of energy and unprocessed food items — continued to increase, reaching 8.57% this month from 8.28% in February. Core inflation has steadily risen since March last year.
Core inflation's continued increase, coupled with the fact that headline inflation in many countries (including in Belgium) is still well above the European Central Bank's (ECB) official 2% target, suggest that the ECB is unlikely to cut interest rates any time soon.
Indeed, despite the recent market turmoil precipitated by the collapse of Silicon Valley Bank (America's 16th largest commercial bank) and the subsequent liquidity crisis faced by Credit Suisse (Europe's 17th largest lender), the ECB decided earlier this month to raise its core interest rate by 0.5 percentage points to 3%: its sixth rate hike in the past 8 months.
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The move drew heavy criticism from the European Trade Union Confederation (ETUC), Europe's major trade union organisation. "After being hammered by a cost-of-living crisis caused by profit-driven inflation, the last thing that working people need is another recession that the ECB risks creating through [another] rate hike," said ETUC General-Secretary Esther Lynch.
In announcing the rate increase, ECB President Christine Lagarde reaffirmed the ECB's commitment to reducing the eurozone's inflation rate back to the ECB's target level. "We are determined to return inflation back to 2% in the medium term, that should not be doubted, the determination is intact."
Her words echoed comments made in an interview earlier this month with Spanish media group Grupo Vocento, in which Lagarde explicitly noted that core inflation "is too high", and predicted that "core inflation will be stickier in the near term".