STATEC, Luxembourg‘s statistics portal, is forecasting an inflation rate of 2.2% for the country in 2025, up slightly from 2.1% in 2024.
The revised figure follows a period in which inflation rates fell below 1% in the last quarter of the year, before rising to nearly 2% at the start of 2025 as the lifting of tariff shields led to an increase in gas and electricity prices.
Energy prices
Petroleum products in particular rose by 4.4% year-on-year in January 2025, compared to a 8.1% decline in December 2024. Other factors contributing to the inflationary pressure in early 2025 were increases in heating oil and gas prices, which jumped by 28% and 35%, respectively, compared to December 2024.
Elsewhere, electricity prices rose by 24%, contributing 0.4 percentage points to the overall inflation rate.
Away from energy, the price of non-energy industrial goods and food remained relatively stable in Luxembourg in January 2025, with minor increases of 0.3% and 0.6%, respectively.
Impact on inflation
‘In Luxembourg, government measures on energy prices introduced during 2022 and 2023 have kept inflation at a lower level than in the eurozone,’ STATEC said in a statement. ‘The complete disappearance of measures on petroleum products on 31 December 2024 and the partial abolition of electricity price-cap measures (with the price increase limited to 30% compared with September 2022) would, however, result in an upward adjustment in energy prices in 2025, which should subside by 2026, in line with the fall in energy prices on international markets.’
The subsiding of energy prices over the course of this year will bring inflation down closer to 1.8% in 2026, it added.
Alternative energy price scenarios noted by STATEC include a high-price scenario fuelled by price increases in electricity, gas and Brent crude, by 32%, 1% and 13% respectively, in 2026; while a low-price scenario anticipates a smaller increase in electricity prices (of around 5%) and a fall in the price of gas (-13%) and Brent (-21%) next year.
‘It goes without saying that market price expectations are volatile and that the resulting forecasts for 2026 should be treated with caution,’ STATEC added. Read more here.
