Statec, the national statistics bureau, said that consumer prices rose by 0.67% in January 2021 compared to December 2020, and by 1.88% compared to January 2020.

Much of last month’s inflation was driven by the country’s newly introduced CO2 tax, which pushed energy prices up by 11%, Statec stated on 17 February.

Fish and seafood (+4.5%), fresh vegetables (+7.4%), financial services (+1.8%), and the costs of going to hairdressers and beauticians (+1.6%) also rose.

On the other hand, airline tickets (-16.9%), package holidays (-8.2%), preserved meats (-2.7%), and entertainment and leisure costs (-0.70%) all declined.

In a separate report, Statec forecast that inflation would hit 1.7% this year and 1.8% in 2022. The actual inflation rate could range between 1.5%-1.9% this year and 1.1%-2.3% in 2022, based on the price of oil.

Indexation

The next round of indexation, the automatic rises in salaries and pension payments, is forecast to take place during the second quarter of 2022, according to Statec. Indexation could be triggered during the first quarter of 2022 if energy prices accelerate or in the third quarter of 2022 if energy markets flatten.