Luxembourg Inflation Highest in Two Years

Luxembourg’s annual inflation rose to its highest rate in almost two years in July, driven by higher clothing, food and drink costs, state statistics office Statec said.

Prices increased 1.9% in July compared with the same period last year, Statec said in a statement. Compared with June prices fell 0.7%, mainly due to shops’ summer sales, News.com.au reported.

“The underlying inflation rate continued its ascent, a trend it has been on since the beginning of the year,” Statec said. It is “at its highest level since December 2015.”

On an annual basis the price of clothing and shoes increased 4.1%, food and non-alcoholic drinks 2.9% and tobacco 2.4%, Statec said.

Meanwhile, Luxembourg’s real GDP forecast for 2017 has been raised by 0.7 of a percentage point compared with the predictions made six months ago, according to the Central Bank of Luxembourg.

The CBL’s governing council released a statement outlining Luxembourg’s economic development for this year.

The June forecast for the 2017’s real GDP is now 4.6%—up from the 3.9% predicted last December. The acceleration of growth in 2017, according to the CBL, comes as a result of an increase in exports due to growing international demand.

Another contributing factor is the development of the financial markets. The sharp increase in the stock markets since the end of 2016 resulted in an increase in investment funds in the first quarter of 2017.

Luxembourg’s financial sector is expected to gain more momentum this year and due to European growth becoming wider and stronger, other sectors of the Luxembourg economy could also be on the up.