Gas and electricity prices soar, indexation still due in spring

After falling by 13.6% in December 2024, the price of electricity rose by 43.9% in January 2025, the National Institute for Statistics and Economic Studies (STATEC) outlined in its latest report published on Wednesday. To account for this sharp rise, STATEC firstly cites the partial lifting of the tariff shield at the beginning of 2025, "which corresponds to an increase of 24.6% compared with September 2022, the reference date for the introduction of the tariff shield".

The report also confirms that gas prices are set to rise by around 36% due to the end of the state's coverage of grid usage charges, introduced in May 2022, and an increase in Luxembourg's carbon tax. According to STATEC, "the end of the government's contribution to grid costs alone accounts for 34.5% of the rise in gas prices".

Another significant price hike is the price of heating oil, which has increased by 28% compared to December 2024, as a direct result of the end of the 15-cent-per-litre subsidy paid by the state until 31 December.

Fuel prices are also on the up in Luxembourg with an increase of 3.8% for a full tank of petrol and 4.1% for a full tank of diesel compared with last month. Overall, fuel prices have risen by 4.4% compared with January 2024.

Finally, when it comes to food prices, a slight increase of 1.1% can be observed compared to December. Costs of produce such as fresh fish (+9.8%), fresh vegetables (+4.0%), and meat (+1.2%) rose the most, while rice (-2.5%), sauces and condiments (-1.2%), and skimmed and semi-skimmed milk (-1.1%) did not.

As a result, the annual inflation rate has almost doubled, rising from 1.0% to 1.9% in the space of a month. STATEC is projecting inflation of 2.2% for this year and 1.8% for 2026. However, this does not change the dates for the next indexations, which are still scheduled to take place in the second quarter of 2025 and the second quarter of 2026.