To 3.6 percent

National Bank expects inflation to fall

The Austrian National Bank expects inflation to fall to 3.6% this year (symbolic image).

(Bild: APA/BARBARA GINDL)

The Austrian National Bank expects inflation to fall to 3.6 percent this year. Compared to the previous year, this is a halving. Inflation is expected to be around 2.7 percent in 2025 and 2.3 percent in 2026.

In January 2023, the Austrian inflation rate reached a 70-year high of 11.6%; by February this year, it had fallen back to 4.2%. Contributory factors included the government's electricity price brake, the grid cost subsidy and slower price increases for food and non-energy industrial goods. This trend is continuing, albeit at a slower pace, the National Bank announced on Wednesday.

High value for services
"The changed assumptions for energy prices will have a dampening effect on inflation in 2024 in particular; energy prices will fall over the entire forecast horizon." Inflation would remain high in the services sector, however. According to the SNB, this is due in part to the high demand for tourism.

Further above the eurozone
The high inflation in services is one reason why Austria's value will remain above the eurozone average. At the beginning of the year, the gap to the eurozone was around 1.5 percentage points.

According to the current forecast, gross domestic product is expected to grow by 0.5% this year and by 1.8% next year.