Salaries will increase from 1 June

On Friday morning, the National Institute for Statistics and Economic Research (STATEC) officially confirmed that the automatic income indexation mechanism in Luxembourg had been triggered. From 1 June, state benefits, pensions and employees’ wages will be increased by 2.5%.

This decision came as no surprise to the financial sector, but it did require precise statistical calculations. According to the department’s report, the country’s inflation rate stood at 2.3% at the end of May. As a result, the average half-yearly value of the consumer price index exceeded the required regulatory threshold of 1,038.79 points.

Luxembourg’s current indexation system provides for automatic pay rises to offset the rising cost of living and maintain the population’s purchasing power as soon as cumulative price inflation reaches a level set by law. Accordingly, from next Monday, employers and pension funds are required to increase all payments.