Inflation hit 6.3% and then dropped to 5.4% at the end of 2021 Photo: Shutterstock.

Inflation hit 6.3% and then dropped to 5.4% at the end of 2021 Photo: Shutterstock.

The European Union has seen an increased rise in inflation while member states’ governments have also been combatting rising gross debt. Luxembourg government's debt is stable, while inflation in the country has hit record levels.

In the second quarter of 2021 the EU average debt reached a total of 90.9%. There was a sharp rise of 77.2% in the last quarter of 2019, just before the covid crisis. While government debt had been decreasing steadily since the beginning of 2015.

Only Estonia (19.6%) and Bulgaria (24.7%) have a lower percentage of overall government debt when compared to Luxembourg (26.2%). Estonia’s government debt more than doubled in the first quarter of 2020, from 9.1% to 18.8%, while Luxembourg’s debt increased by 1.6% for the same time period.

Greece has the highest government debt by a considerable margin at 207.2%. In 2018, it completed its bailout program which begun in 2015. In total, Greece owes the EU and IMF an estimated €290bn, which it expects to repay no earlier than 2060.

In terms of inflation, the EU has recorded a dramatic increase, rising from 0.2% in November 2020 to 5.2% a year later in November 2021. Luxembourg has not been immune to rising inflation, rising from -0.7% to 6.3%, an incredible 6.6% increase in 12 months. This peak represents the highest level of inflation in the grand duchy and separately for the EU, from data made available by Eurostat, beginning January 2008.

The country with the greatest percentage of inflation in the EU is Estonia with 8.6% in November 2021, increasing to 12% the following month. Between November and December 2021, Luxembourg’s inflation dropped by 0.9% to 5.4%

Inflation is calculated using the Harmonised Index of Consumer Prices (HICP), a set of consumer price indicators defined by the European Central Bank (ECB). The primary goal of the ECB is to maintain price stability, which it defines as as keeping the year on year increase HICP below or close to 2%.