Product inflation can negate the effect of indexing?
Eurostat has published an updated survey of food inflation in Europe and Turkey for June. Food price increases are visible and tangible in all countries for which indicators are available.
And while some figures may seem relatively small, we should not forget another important factor — the underlying costs.
The June data:
The countries with the highest food inflation were Turkey (54.3%), Hungary (28.4%), and Serbia (24%). These figures show the monthly increase in the cost of products. Estonia, Slovakia, and Poland follow with a small gap. Luxembourg is not among the 10 worst countries on this list, but it is not in the top 10 either.
Food inflation in the Grand Duchy was 11.4%, which is quite good compared to Turkey's 50+%. However, we should not forget one important thing: Luxembourg's basic cost of goods and services is significantly higher than in most other countries. Therefore, an 11% increase here may coincide with 15%, 19%, or even 20% increases in other countries.
A recent open letter from the Consumers' Union explicitly refers to the persistent negative publicity Luxembourg has received due to the fact that its citizens pay more for food than anyone else in the EU.
Food inflation, activists say, has the potential to wipe out all the tax credits and wage indexation because people won't have the time to cover rising food costs.
This brings us back to the conversation that Luxembourg's tax system needs to be reviewed in the direction of greater fairness. And while many consider the Grand Duchy's taxes to be among the fairest in the world, the Sustainability Committee also recommends, if not reform, then at least a rebalancing of deductions.
