Annual inflation fell to 2.3% in May

Annual inflation has slowed, falling from 3.1% in April to 2.3% in May. This slowdown is mainly due to a month-on-month fall in energy prices and a more moderate rise in service prices. 

Chart 1: Annual inflation rate and contributions

Source: STATEC

In May, energy prices in Luxembourg fell, recording a monthly decline of 2.5%. Despite this short-term drop, the year-on-year trend remains clearly upward, with a rise of 16.1% compared with May 2025. The decrease observed in May is largely due to changes in heating oil prices. Following a sharp rise of 23.0% in April, these fell significantly in May (-10.7%). Year-on-year, however, heating oil prices show a marked increase of 62.9%. Fuel prices also recorded a slight monthly fall of 1.4%. Year-on-year, they rose by 29.2%. The price per litre of diesel fell by 7.1% over the month, whilst that of petrol rose by 4.2%. Meanwhile, the price of gas rose by 2.5% compared with the previous month, whilst the price of electricity remained stable in May. 

The food aggregate (including alcohol and tobacco) shows an annual increase of 2.1% compared with May 2025. Certain sub-components stand out: fruit vegetables (+11.5% year-on-year), chocolate (+7.9%) and coffee (+6.3%). Conversely, prices for cereals and ice cream fell, with decreases of 3.3% and 2.7% respectively. As for alcoholic beverages, these recorded a slight monthly decrease of 0.4%, driven in particular by the fall in wine prices (-0.6%). However, on an annual basis, prices for alcoholic beverages remain broadly stable.

Prices for services rose by 1.3% year-on-year, compared with 2.3% the previous month. This slowdown is largely due to the increases that took place in May 2025 following the index-linked adjustment, which no longer contribute to the annual change this month. On a monthly basis, however, certain services stand out due to seasonal fluctuations: airfares, for instance, rose sharply by 21.4% over the month (though the annual change stands at -7.7%), whilst a monthly fall was observed in the fees for crèches and after-school care centres (-6.5%). A significant increase was also recorded for bundled telecommunications services, up by 11.8%.

The aggregate for non-energy industrial goods shows a slight year-on-year increase of 0.5%. The sharpest annual rise was seen in water supply, which rose by 10.4%. Price rises were also recorded for kitchenware and utensils (+4.7% month-on-month). On the other hand, price falls were recorded for other information and communication accessories (-10.9% month-on-month) and for other major durable goods for recreational use (-6.7%).

Table 1: Price changes for the four main IPCN aggregates

Source: STATEC

The annual inflation rate fell to 2.3% in May, down from 3.1% in April. The all-items index excluding energy fell from 1.9% to 1.2%. The all-items index for May, expressed on a 2025 base of 100, stood at 102.48 points. 

The six-month average of the index linked to the base date of 1 January 1948 rose from 1,038.35 to 1,041.62 points, thereby exceeding the trigger threshold for an index adjustment, which was set at 1,038.79. In accordance with current legislation1, an index bracket is applied in the month following its triggering. Consequently, the new index level for the application of the sliding scale of wages of 992.24 points (previous level: 968.04 points) comes into force on 1 June 2026, resulting in a 2.5% increase in wages, salaries and pensions from that date.

TABLE 2: Price changes in the 13 divisions of the IPCN

Source: STATEC

Chart 2: Evolution of the Price Index and Inflation in Luxembourg

The chart shows the parallel evolution of the price index (yellow line) and the annual inflation rate (blue line) in Luxembourg since 2016. The horizontal lines indicate the various index thresholds corresponding to index tranche levels. The index gradually moves towards the current threshold, while inflation fluctuations explain periods of faster or slower progression.

The results of the June 2026 index will be published on 8 July 2026, following the Index Committee’s monthly meeting. A preliminary estimate of the annual inflation rate will be published on 30 June 2026.