Inflation remains high

Ten billion euros in purchasing power lost since 2022

We still have to dig deeper into our pockets than others in Europe.

(Bild: stock.adobe.com/wifesun - stock.adobe.com)

Prices in Austria rose by "only" 4.5% year-on-year in January. This was the lowest figure since 2021, but it is well above the euro average. And the decline is slow, according to experts. Some stubborn price drivers are to blame. This is costing consumers billions of euros.

Last December, prices rose by 5.6 percent in Germany; in January, inflation was at least noticeably lower at 4.5 percent. The last time it was similarly low was in December 2021. So the trend is right. However, we are still well above the eurozone average of just 2.8%. The relief for consumers is therefore too slow.

"Still an inflation stronghold"
The Momentum Institute calculates that the high prices have cost employees and pensioners more than ten billion euros in purchasing power since 2022. Jan Kluge from Agenda Austria is also critical. "We are still an inflation stronghold. In addition, inflation in January has always been lower than in the rest of the year, for example because discounts start after Christmas. From April onwards, there is usually an upward trend, for example due to rent increases."

(Bild: Krone KREATIV)

One price driver in January was restaurants and hotels, which charged 9.1 percent more than a year ago. Without this "tourism effect", overall inflation would only have amounted to 3.3 percent. Kluge: "The industry has higher costs for energy, labor is scarce and expensive, they are capital-intensive, which now costs high interest rates. The companies therefore had to raise their prices, and they can do so. Guests have more money in their pockets because of the government aid."

Some foodstuffs such as baked goods (+5.1%), vegetables (+10.6%), non-alcoholic beverages (+11%) and new residential rental contracts (+9.1%) were also very expensive. By contrast, electricity became 4.5% cheaper and fuel fell by 4.2%. 

Home-made inflation
Things are unlikely to get much better in the coming months, and the electricity price brake will expire at the beginning of 2025. In general, Austria has long had slightly higher inflation than other eurozone countries, as Jan Kluge explains: "It has mostly been around 0.5 to 1 percentage point difference, for example due to the influence of tourism. That has hardly mattered. Above all, the regulations in tenancy law and the long-term favorable energy supply contracts have limited inflation. Recently, however, it has shot up, more than in other countries." On top of that, home-made inflation remains ...