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There’s a bit of good news for Belgian consumers: the federal energy regulator, CREG, issued a noteworthy draft decision on 10 November, characterising certain formula adjustments to energy contracts as "unfair trade practices". As from January 2023, it therefore aims to require energy suppliers to observe stricter indexation rules.

In an inflationary world like we have been experiencing the last 12 to 18 months, companies are constantly confronted with exponentially rising costs. They can react in a more traditional way, for example by increasing stock or by negotiating fixed prices with their providers. However, these solutions are not always easy to get. Furthermore, the counterparty risk has also deteriorated a lot the last few months. In this article we highlight some examples of financial derivative products that can help companies in (partly) managing the volatility caused by the inflationary pressure. We focus on currency- and commodity-risk products and on inflation-swaps as examples of products that can be used for this risk management. Companies should at least contemplate the use of such products to cushion some of the inflationary pressures that surround them.

There are many reasons for the huge inflation, and they reinforce each other. Considering the recent developments in energy prices, inflation should start dropping from the end of 2022 onwards. The impact of the owner-occupied house price index (OOH) on the harmonised index of consumer prices is quite neutral. Given the large swings in energy wholesale market prices, forecasting the inflation is not evident. The NBB follows a bottom-up approach via the estimation of different components: energy, food, and core inflation. The impact of the high inflation, caused to a large extend by the energy prize shock, implies an impoverishment of the Belgian economy. On average the purchasing power of the households is protected, as a large part of the bill (wage costs) is paid by the companies. But higher wages negatively impact the competitiveness of the companies. Also, the primary fiscal deficit of the government is increasing, while the public debt is growing. In response to the high inflation environment, the ECB has tightened the monetary policy by increasing interest rates and stopping the net purchase programmes.

A national bank would not be a bank if it could not lend money. Indeed, only a commercial bank can take out a loan from the national bank, but other than that, the process is not that much different from when you as an individual take out a loan from a commercial bank. To take out a loan from a national bank, you would also need collateral, independent third parties and - as for all financial institutions - risks are controlled to a maximum.