Luxembourg can expect its next wage indexation in the third quarter of 2026, STATEC projected Wednesday, linking the timeline to a sustained period of elevated inflation that is now forecast to be slightly higher than previously expected.

The National Institute of Statistics and Economic Studies (STATEC) announced on Wednesday that while monthly inflation saw a slight dip, annual inflation remains high, paving the way for two anticipated wage indexations – one in late 2026 and another in 2027.

Following the last indexation on 1 May 2025, the next automatic wage increase is now projected for the third quarter of 2026, with a subsequent one expected in the third quarter of 2027, according to the institute's latest forecast.

A 0.2% decrease in the consumer price index between September and October was largely driven by falling costs for travel and fuel. Prices for package holidays dropped by 6.8%, while airfares fell 6.4%.

Despite this short-term relief, the broader inflationary trend "remained sustained" through the third quarter. STATEC now expects inflation to rise in the final two months of the year, leading to a revised annual forecast. The institute has raised its 2025 inflation projection to 2.2%, up from the 2.1% predicted in August. For 2026, the forecast is 1.5%, a slight increase from the previous 1.4%.

This anticipated slowdown in 2026 is attributed to an expected stabilisation of energy costs. STATEC projects a 15% decrease in electricity prices next year, alongside declines in gas (-7%) and Brent crude (-8%). These factors "should bring energy inflation down to -6.3% in 2026."

However, food inflation is expected to move in the opposite direction, rising from 2.0% in 2025 to 2.4% in 2026.

Looking further ahead, STATEC projects that, assuming government support measures are extended and the economic situation improves, inflation would approach the 2% target, with an annual rate of 1.9% forecast for 2027.