The annual inflation rate in Luxembourg slowed sharply to 1.3% in January 2026, marking the lowest level in December 2024, down from 3.1% in the previous month. Main downward pressure came from a steep drop in housing and utilities (-1.55% vs. 7.76% in December), reflecting significantly lower energy costs, including a 10.5% decline in electricity prices, supported by government contributions to network usage fees. Petroleum products also continued their downward trend. Prices fell for clothing and footwear (-3.26% vs. -0.09%), transport (-0.38% vs. 1.39%), and information and communication (-0.55% vs. -1.6%). Meanwhile, inflation eased for food and non-alcoholic beverages (2.81% vs. 3.43%) and financial services (1.58% vs. 2.24%). On a monthly basis, consumer prices dropped 1.3% in January, the largest decline since January 1999, following a 0.1% increase in December.