In the coming weeks, Prime Minister (DP) plans to meet with the Tripartite Coordination Committee to discuss the next steps in the context of Solidaritéitspak 2.0, the agreement by the committee. As the tripartite measures expire at the end of the year, terminating Solidaritéitspak 2.0 would kick 2024 off with an inflationary shock, with Luxembourg already expecting three indexations of wages and salaries this year.

The was triggered in February. A  will be added in April, corresponding to the indexation tranche postponed from June 2022 to April 2023.

In a recent publication, Statec says that inflation remains contained and sticks to 3.4% as its inflation forecast for 2023, while anticipating an increase to 4.8% next year. According to the statistical institute’s analysis, the state measures on energy prices implemented during 2022 have made it possible to contain inflation. However, it expects a new index bracket to be triggered in the fourth quarter of 2023, which the Union des entreprises luxembourgeoises (UEL) has estimated at €800m.

Contained inflation in 2023

Statec explains that, in 2023, household gas prices will not increase by more than 15% compared to their value in September 2022, while electricity prices will not increase at all and heating oil prices will benefit from a discount of 15 cents per litre.

More generally, prices are expected to fall (or rise less) as a result of the by one percentage point from 1 January 2023. Without this measure, Statec points out, gas prices would have risen by 92% in 2022 and 33% in 2023 due to surges in market prices up until mid-2022. Such an increase would in turn have affected electricity prices, making them rise by 69% in 2023. In this situation, inflation would have reached 7% in 2022 and 7.5% in 2023 with six overshoots between March 2022 and Q4 2023.

This story was first published in French on . It has been translated and edited for Delano.