Luxembourg’s annual inflation rate fell sharply to 1.3% in January 2026, the lowest level since December 2024, down from 3.1% in December. The main downward pressure came from a substantial decline in housing and utilities prices (-1.55% vs. +7.76% in December), driven by significantly lower energy costs. Electricity prices dropped by 10.5%, supported by government contributions to network usage fees, while petroleum products also continued their downward trajectory.
Prices also decreased for clothing and footwear (-3.26% vs. -0.09%), transport (-0.38% vs. +1.39%), and information and communication (-0.55% vs. -1.6%). At the same time, inflation moderated for food and non-alcoholic beverages (2.81% vs. 3.43%) and for financial services (1.58% vs. 2.24%).
On a monthly basis, consumer prices declined by 1.3% in January, following a 0.1% rise in December. This marks the largest monthly drop in consumer prices since January 1999.
