Wages were last adjusted to inflation at the start of 2020 by 2.5% to make up for the rise in cost of living. Statec’s estimates for the timing of the next adjustment have been swinging back and forth between the end of 2021 and early 2022.
But in a monthly analysis of the Luxembourg economy, published on 24 August, Statec held on to a deadline in the last quarter of this year. “Luxembourg households have not yet had to face marked price increases,” the report said about consumer prices picking up, but underlying inflation is set to rise.
Rising oil prices and higher construction costs are bringing up inflation, Statec said, but most of Luxembourg’s consumer price index basket is composed of services, where price rises are more moderate than they are for manufactured goods.
Starting 2022, Luxembourg will also adjust family benefits to inflation, which it had stopped doing in 2006. The government under prime minister Xavier Bettel (DP) during a meeting on 12 May agreed to make good its coalition agreement promise to reintroduce the indexation of family benefits.