Economy: Consumer prices rose more than three percent in February, which will initiate an increase in salaries, the social minimum wage and pensions this year, Luxembourg’s statistics agency said Tuesday.
STATEC reported inflation was 3.1% last month, largely driven by a 1.3% increase in the cost of petroleum products. The bureau also saw higher prices in February for housing and utilities (5%), transport (3.6%), and food and beverages (2.3%).
Last week pan-European statistics agency Eurostat said Luxembourg had the fifth highest rate in the euro area in January, 3.2%. STATEC previously announced that inflation was over three percent in December and for 2011 overall.
Indexation is triggered when the overall cost of living rises by 2.5%. Under Luxembourg’s current regulations, salaries and retirement cheques will go up--according to a sliding scale--after a six month delay. That means employers and social insurance funds will need to increase payments starting on October 1 this year.
Etienne Schneider--the newly appointed economy minister--and Yves Mersch, the long serving president of the central bank--are among those that have said the system of automatic indexation needs to be reformed in order for Luxembourg to remain economically competitive.