"Inflation in Belgium is rising too quickly"
The Governor of the National Bank of Belgium Guy Quaden has expressed his concern about rising inflation
December 14 2007- The Governor of the National Bank of Belgium Guy Quaden has expressed his concern that rising inflation will serve to fuel an increase in wage levels. Inflation in Belgium is expected to rise to almost 3% next year, while economic growth is expected to fall to below 2%.
The fact that many wages are index-linked means that the average wage burden in Belgium will increase more quickly as a result of the rise in the level of inflation. Consequently, wages are now set to go up more that was originally agreed by the employers' organisations and the trades unions.
Wages went up by an average of 2.8% this year and are expected to increase by 3% during two 2008.
This is comes to a total increase of 5.8% over two years, 0.8% more that the level originally agreed upon by the employers' and the unions.
Governor Quaden of National Bank of Belgium told VRT radio that wage increase demands must remain reasonable. He added that "wage restraint should apply to everyone, even top managers".
Rising inflation will also make it harder for our companies to compete in international markets.
The National Bank predicts that Belgium will have a trade deficit of 0.4% in 2008.
Mr Quaden also called on the food distribution and retail industries to exercise price restraint.
However, the Head of the retail chain Carrefour told the daily 'De Morgen' that prices are set to rise twice as much next year as they have this year.