Historic drought, general inflation, conflict in the Middle East – the global economy is caught in strong turbulence. But Statec's latest flash report, published on Tuesday, suggests Luxembourg is weathering the storm.
"There are some positive signs regarding household consumption", Statec writes, particularly with a significant increase in new car registrations.
Business confidence indicators recovered somewhat at the beginning of summer 2026. Industrial production increased for the third consecutive month in May, and construction production continued its slight upward trend that began at the end of 2025.
In the non-financial services sector, production figures (turnover in volume), available for April and May, show more mixed results: the situation is improving in the transport and warehousing, hospitality, and real estate sectors, but declining in information and communication services and business services.
The report notes that Luxembourg has suffered an exceptional drought, the consequences of which on economic activity are currently difficult to assess, particularly in the industrial and agricultural sectors. Low yields for certain crops could drive up food prices. While food inflation has remained moderate in recent months, the droughts, transport difficulties on the Rhine and Danube rivers, and the rise in fertiliser prices due to the closure of the Strait of Hormuz will have negative effects.
Furthermore, there are worrying forecasts of a strong to very strong El Niño event by the end of the year, which could exacerbate tensions on agricultural commodities. Bearing this in mind, Statec forecasts food inflation of 2.1% in 2026, rising to 2.4% in 2027.
Restaurant prices rose strongly in 2022 and 2023 and have continued to do so year on year. The increase was 3% in 2025, and has since risen to join the Eurozone rate of 3.9% in July this year.
Construction prices slowed in 2024 after exploding in 2021-2023. Since early 2025, they have begun to accelerate gradually, increasing by 2.7% year on year in the second trimester of 2026, compared to 2% in late 2025. Forecasts suggest these will continue to accelerate in the months to come.
The next index is still far away. In a previous report, Statec forecast inflation of 1.8% this year, down from the previous forecast of 2.5%. For 2027, it estimates a 2.1% increase. After the index dated 1 June 2026, the next index tranche is likely to occur in the third trimester of 2027.
