Wages to increase faster than expected

Belgium is battling an inflation rate which is a lot higher than the average for the eurozone, which is slightly negative with -0.1 percent. Under the automatic wage indexation system, this means that wages are to go up, but the high inflation is not all good news.

Yesterday, it turned out that the Belgian inflation rate for the month of March was as high as 2.24 percent. In other words, life became 2.24 percent more expensive on the year, which is mostly due to VAT on electricity being raised to 21 percent, coming from 6. An extra Flemish tax on electricity, to pay for the solar panel compensations from the past, made electricity even more expensive. Registration fees for students also went up, a sugar tax was introduced etc.

A high inflation rate means that wages will also go up under the system of automatic indexation in Belgium, and this despite the present government opting for a one-off skipping of this mechanism to make labour cheaper, to improve Belgium's position on the international market.

A pay rise next summer or early 2017

Experts estimate that social benefits and salaries in the public sector will go up in July or August. Most private companies would follow in January 2017. This may sound like good news, but it has been calculated that the small extra you may earn each month, will almost entirely be spent on your higher electricity bill. It's also bad news for the government, which had only expected an indexation by mid-2017.

There is some good news for consumers though: borrowing money from the bank is at a historic low. It's a good moment to buy a house or a car; mortgage rates for real estate were never so low. At the same time, your debts "devaluate" due to the inflation.