In the first seven months of the year, prices rose less than expected in the spring, STATEC said on Thursday. The national statistics institute also revised its forecasts downwards considerably.
The conflict in the Middle East calmed down in June. Oil prices on international financial markets are at a significantly lower level than between March and June, when the Strait of Hormuz was closed due to the US-Israeli campaign against Iran. Brent today costs around 80 US dollars a barrel, after peaking at over 110 dollars in May.
The second explanation for the decline in inflation is the tripartite agreement which took place at the beginning of June: the government and the social partners agreed on a number of measures to stem the rise in energy prices – measures that came into effect immediately in July and now on 1 August.
While three months ago STATEC was expecting 2.5% inflation for this year, it has now been revised to 1.8%.
However, STATEC is predicting higher inflation next year than in its May forecast, as the rise in energy prices will only have a delayed impact on certain products, particularly food. US tariffs will also play a role in the secondary impacts.
Back in May, STATEC estimated an index tranche would occur in the second trimester of next year, between April and July 2027. After the tripartite agreement was struck, it revised this estimation, pushing it back by a trimester.
The last index tranche fell this June. STATEC calculated a number of scenarios when the Iran conflict was at its worst, preparing for the tripartite. in the worst-case scenario, there could have been three index tranches between June 2026 and September 2027.
The CSV-DP coalition agreement states that if more than one tranche falls due within a year, a tripartite group should meet to decide on measures to combat the loss of purchasing power and maintain the competitiveness of companies.
In the current circumstances, however, this is unlikely to be required.
STATEC remains cautious, of course, because the geopolitical situation is very uncertain. In the event that the conflict in the Middle East escalates again and energy prices explode again like in the spring, an index tranche could still possible before the end of this year.
