From Highs of 9.59% to a Forecasted 1.9%: The Future of Inflation and Its Impact on Government Benefits and Salaries

Inflation is predicted to be 3.1 percent this year, according to the latest forecasts from the Planning Bureau. This is slightly lower than the previous forecast in April, which predicted an average annual inflation rate of 3.3 percent. The health index, which is used for indexing wages, social benefits, and rental prices, is also expected to be 3.1 percent this year and 2.0 percent in 2025.

Inflation was at 4.06 percent last year on an annual basis and stood at a staggering 9.59 percent in 2022. Looking ahead, the forecast for next year is an average annual inflation rate of 1.9 percent. In April, the key index for government wages and social benefits was exceeded, leading to adjustments of social benefits in May and government employees’ wages in June by 2 percent to account for the increased cost of living. The Planning Bureau anticipates that there will be another exceedance of the central index in February 2025 based on current projections.