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Energy prices rose twice as fast in Belgium than in neighbouring countries
The price of energy products increased across Europe in 2021, but they rose on average twice as fast in Belgium as in neighbouring countries, according to the annual report of the FPS Economy's Price Observatory on Friday.
In neighbouring countries, energy prices climbed by an average of 10.9% a year (+10.1% for Germany, +10.6% for France, +17.3% for the Netherlands), while in Belgium prices rose by 22.4% on average, the report found.
“This stronger inflation of energy in Belgium can be explained by the sharp fall in prices of energy raw materials in the second quarter of 2020, as well as their strong increase in 2021 (due to economic recovery and external factors) and the faster impact of these developments on consumer prices in our country,” the FPS reported.
“Indeed, the rise or fall of wholesale prices is reflected more rapidly in Belgian electricity and gas bills due to the larger proportion of variable contracts with interim price adjustments, while in neighbouring countries it is mainly fixed contracts (and therefore without interim indexation) that are offered.”
Another contributing factor to the sky-high energy bills Belgians have been facing is the greater weight of the variable component (ie the energy component) in gas bills and in the price of liquid fuels, “because of the low level of taxes and, for gas, the lower network tariffs,” explained the FPS. This means that energy prices react more quickly to changes in commodity prices.
The soaring costs prompted the Belgian government to take action, releasing a package of measures last week aimed at helping households cope with steep bills.
Meanwhile, although prices for processed food (not counting alcohol and tobacco) remained more or less stable in the country, unprocessed food saw a decrease in inflation.
Apart from energy, end-of-year inflation in Belgium increased for all other product categories, and the Belgian economy is the slowest growing in Europe at the moment.