Energy prices are expected to fall in Luxembourg

STATEC presented a medium-term economic forecast in which it predicted a tangible reduction in energy prices in 2026 - by almost 7%. This change, according to analysts, can significantly improve the purchasing power of the population.

The main reason for the expected drop in prices is said to be the fall in global oil prices, which is compounded by government intervention - in particular, subsidising the cost of transporting and distributing electricity. In July, the authorities approved a €150m aid package aimed at compensating grid operators. This should lead to a reduction or at least stabilisation of network charges for consumers in 2026.

Interestingly, even with the planned annual increase of the CO₂ tax by €5 per tonne, the overall price of energy will continue to decline, according to STATEC calculations. This shows the power of external factors in shaping the final cost of utilities.

As energy costs account for a significant share of the inflation basket, the overall decline in energy prices is expected to pull down average annual inflation. It could be as low as 1.4 per cent in 2026, one of the lowest levels in recent years.

However, this slowdown in inflation has a downside: Luxembourg's wage indexation mechanism may not be activated until the third quarter of 2026 at the earliest. This means that there will be no formal wage increases due to rising prices until the end of the year.