Impact of inflation in Belgium: how to protect your savings

What is inflation?

Inflation is the general increase in prices over time. When inflation rises, each euro buys less than it did before.

For instance, when Curvo co-founder Yoran was 16, a mitraillette (Belgian delicacy) cost €4.00. Today, it costs almost twice as much.

Governments measure inflation using the Consumer Price Index (CPI). This index tracks the average price change of a representative basket of goods and services. In Belgium, the CPI is published by Statbel. Since 2005, the consumer price index in Belgium has risen by 60%, from 84 to 135.

The important thing to understand is that inflation compounds. It's not a one-time hit. Each year, prices rise on top of the previous year's increases. This is similar to how compound interest works, except it works against you instead of for you.

Why does it happen?

Inflation is a normal part of a healthy economy. Central banks, like the European Central Bank (ECB), actually target a moderate level of inflation. The ECB's target is 2% per year.

A small amount of inflation is actually desirable. It encourages people to spend and invest rather than hoard cash. This keeps the economy moving. Zero inflation, or worse, deflation (falling prices), can cause people to delay purchases. That leads to economic stagnation.

Since Belgium is part of the eurozone, the ECB's monetary policy directly affects us. When the ECB adjusts interest rates or prints money, it influences how fast prices rise in Belgium.

The impact of inflation on your savings in Belgium

This is where things get personal. You might think your savings are safe in a Belgian bank account. After all, the number on your screen stays the same (or grows slightly with interest). But the real question is: what can that money actually buy?

Your savings lose value every year

The interest rate on most Belgian savings accounts has been below the rate of inflation for roughly two decades. This means your savings have been losing purchasing power year after year, even if the balance kept growing.

Think of it this way. If inflation is 2% and your savings account pays 1.1%, you're losing about 0.9% of your purchasing power every year. That doesn't sound like much. But over 20 or 30 years, it adds up to a significant loss.

The best savings accounts in Belgium currently offer a median rate of about 1.1%. That's better than the near-zero rates of recent years, but it's still not enough to keep up with the ECB's 2% inflation target.

See for yourself

The chart below shows how the purchasing power of a lump sum has declined in Belgium since 1995, based on actual CPI data.

The decline isn't smooth. Some years had low inflation (2015 even saw slight deflation). Others, like 2022, saw a sharp spike. But the trend is clear: cash loses value over time.

This is why saving alone is not enough. To maintain your purchasing power, you need your money to grow faster than inflation.

The solution: investing to beat inflation

If savings accounts can't keep up with inflation, what can? The answer is investing in assets that historically grow faster than prices.

The stock market has delivered average real returns (after inflation) of about 6% per year over long periods. That means investors who stayed the course didn't just preserve their purchasing power. They multiplied it.

Of course, investing comes with risk. Stock prices go up and down. There's no return without risk. But over the long term, the stock market has consistently beaten inflation.

The key is to start early and stay invested. Time is your biggest advantage. The longer you invest, the more compound growth works in your favour. If you're new to investing, our beginner's guide is a good place to start.

Compare: cash, savings, and investing

The chart below compares three scenarios over time: keeping cash, putting money in a savings account, and investing. All values are adjusted for 2% annual inflation, so you can see the real purchasing power of your money.

The difference is stark. Cash steadily loses value. A savings account barely treads water. But investing, even with its ups and downs, leaves you significantly ahead.

Want to understand why ETFs are one of the best ways to invest? Read our guide on how to invest in ETFs in Belgium.

We built Curvo to help you beat inflation

When Curvo co-founders Thomas and Yoran started saving for their future in Belgium, they quickly ran into the same frustration. Traditional Belgian banks offered terrible returns. DIY investing through brokers was complicated and time-consuming. And most financial products were designed for experts, not for regular people.

So they built Curvo. Our mission is to improve the financial well-being of our generation.

Here's how Curvo makes it easy to beat inflation:

• Personalised portfolio. When you sign up, we ask you a few questions about your goals, timeline, and risk tolerance. Based on your answers, we match you with the best portfolio for you.
• Automatic investing. Set up a monthly plan and we handle the rest. Your money gets invested automatically, so you don't have to think about it.
• Index funds from top providers. Your portfolio is built from funds by Vanguard, iShares (BlackRock), and Amundi. These are among the largest and most trusted fund providers in the world.
• Licensed and regulated. You investments are overseen by the AFM (Dutch Authority for Financial Markets), the Dutch finance regulator.
• Start in less than 5 minutes. No paperwork, no branch visits.

Curious about how Curvo compares to other options? Check out our comparison of robo-advisors in Belgium or our overview of the best investments in Belgium.

What causes inflation?

Earlier, we mentioned that the ECB targets 2% inflation. But what actually drives prices up? There are three main causes.

Demand-pull inflation

When demand for goods and services exceeds supply, prices rise. This often happens when the economy is booming. People have more money to spend, so businesses can charge more.

Cost-push inflation

When the cost of producing goods increases, businesses pass those costs on to consumers. Rising energy prices, supply chain disruptions, or higher wages can all trigger cost-push inflation. Belgium experienced this sharply in 2022, when energy prices spiked due to the war in Ukraine.

Monetary policy

When central banks increase the money supply (by printing money or lowering interest rates), more money chases the same amount of goods. This pushes prices up. The massive monetary stimulus during the COVID-19 pandemic is a recent example.

Is zero inflation good?

You might think that zero inflation would be ideal. But economists actually disagree. When prices are flat or falling, people tend to delay purchases, expecting things to get even cheaper. This reduces demand, which can lead to job losses and economic recession. A small, stable rate of inflation keeps the economy healthy and growing.

Moderate inflation also makes it easier for companies to adjust wages. In a zero-inflation world, cutting nominal wages is very unpopular, even when real costs need to decrease.

If you want to put your money to work, explore our guide on how to invest money in Belgium.

Protect your savings from inflation

Inflation is a silent tax on your savings. It doesn't show up on any bank statement, but it's there, chipping away at your purchasing power year after year. And with Belgian savings rates consistently below inflation, your bank account is not protecting you.

Over 30 years, the effect is dramatic. €10,000 in cash loses nearly half its buying power. Even a savings account can't keep up. But here's the good news: compounding works in your favour when you invest. The same force that erodes cash can grow your wealth when you put it to work.

You don't need to be a financial expert to protect your savings. With Curvo, you can set up a monthly investment plan in minutes and let compound growth do the rest.