Issues with nuclear reactors driving up the cost of living

The rise in electricity prices caused by the issues that have been besetting Belgium’s nuclear reactors is driving up inflation. According to the Federal Planning Bureau this could mean that the process that sets into motion a 2% rise in public service wages and benefits could be triggered as early as June next year rather than in October 2019 as had been originally predicted. 

The last time this happened was in August, triggering a 2% rise in pensions and benefits in September and a 2% rise in public sector salaries in October. If this is the case it will have budgetary implications for the new federal and regional government after next year’s elections. However, the Federal Planning Bureau is unable to say how much budgetary impact it will have.     

Technical issues that have resulted in a number of reactors at Belgium’s two nuclear power stations being out of action have served to drive up wholesale electricity prices. In turn this has served to fuel inflation.

The Federal Planning Bureau has revised up its inflation predictions for 2018/2019 from an annual inflation rate of 2.0% to a rate of 2.1%.   

This means that the process that triggers a 2% rise in pensions, benefits and public sector salaries will be set in train in June 2019, just 10 after the previous time it was triggered in August 2018 and 4 months earlier than previously predicted.  .

In recent days wholesale prices for electricity have fallen. If this continues is could serve to reduce inflation and delay the predicted rise in public sector salaries, pensions and benefits.