Luxembourg's childcare voucher reform has driven down the cost of childcare in the country
Luxembourg inflation fell to 1.53% in 2018, down from 1.73% the year before, mainly because of childcare subsidies, Luxembourg’s price formation observatory reported on Monday.
Despite an increase in petroleum product prices (+9.65%), the decline comes from a relatively low growth in service prices (+0.79%), due in particular to the fall in prices of nurseries and day-care centres following the entry into force on 1 October 2017 of the reform of childcare vouchers. These vouchers provide a free, multilingual education programme of 20 hours per week for 46 weeks per year.
The voucher scheme, which could be used at accredited facilities, drove down the consumer price index in the sector by 13.9%, the observatory wrote.
Better reimbursement rates for doctors' acts and services and for speech and language therapy, psychomotricity and nursing acts and services provided to children and young people under 18 years of age also had a downward impact on inflation. Indeed the final price paid by consumers for visits to general practitioners and specialists fell by 8.6% and 15.5% respectively.
Luxembourg's inflation in 2018 was lower than that of the EU (1.88%), as well as that of neighbouring countries. In addition to the above, this was also down to an increase in excise duties on alcohol and tobacco in France and Belgium and a hike in electricity costs in the Netherlands.