According to the latest forecasts from the Planning Bureau, inflation is expected to be 3.1 percent this year. This is slightly lower than the previous forecast in April, which had predicted an average annual inflation rate of 3.3 percent. The health index, which is used for the indexation of wages, social benefits, and rental prices, is also expected to be 3.1 percent this year and 2.0 percent in 2025.
Last year, inflation stood at 4.06 percent on an annual basis, and in 2022 it was 9.59 percent. Looking ahead, the forecast for next year is an average annual inflation rate of 1.9 percent. In April, the key index for government wages and social benefits was exceeded, leading to adjustments of social benefits in May and government employees’ wages in June by 2 percent to account for the increased cost of living. The Planning Bureau anticipates the next exceedance of the central index in February 2025, based on current projections.
Inflation has been a major concern for governments around the world in recent years as it erodes purchasing power and creates economic instability. Central banks have been implementing various monetary policy tools to keep inflation under control but with limited success so far. As such, it’s crucial that governments take decisive action to address inflationary pressures while minimizing negative impacts on economic growth and stability.
The health index plays a critical role in determining wage increases and rent adjustments based on changes in healthcare costs over time