The National Institute of Statistics and Economic Studies (STATEC) has revised its inflation forecast for 2024, citing geopolitical uncertainties in the Middle East as a driving factor.

Rising oil prices in recent months due to geopolitical tensions have contributed to a positive inflationary trend since January, particularly impacting petroleum products. Consequently, STATEC has adjusted its inflation forecast for 2024 to 2.3% and anticipates a wage indexation in the final quarter of the year.

Additionally, STATEC projects that the anticipated end of energy price caps by the beginning of 2025 will lead to an increase in gas and electricity prices, further pushing inflation up to 3.1%. Despite this, STATEC maintains its forecast for wage indexation in the third quarter of 2025.

In April 2024, Luxembourg experienced its lowest annual inflation rate in almost three years, registering at 2.4%. This decline is attributed to a reduction in underlying inflation, which stood at 2.4% in April compared to 4.9% a year earlier. However, petroleum product prices unexpectedly rose in recent months, increasing by 3.5% over the past year as of April.

STATEC notes that despite the recent uptick in petroleum prices, the deceleration in inflation aligns closely with the forecasts outlined in February 2024.