Above 4 percent again

Inflation almost twice as high as in Germany

Austria is the EU leader in rising gas prices - and this is also reflected in inflation.

(Bild: APA/GEORG HOCHMUTH)

The economic situation in the country is still barely recovering. In March, inflation rose by 4.1 percent year-on-year - almost twice as high as our German neighbors and three and a half times as high as in Italy. One reason for this is gas prices - Austria is the lone frontrunner in the EU when it comes to increases.

Compared to the previous month of February, the average price level rose by 0.5 percent. Although this is the lowest increase in consumer prices since October 2021, the figure is still twice as high as the ECB's stability target of 2.0%.

Prices for housing, water and energy rose by an average of 4.2% year-on-year in Austria in March, while food and non-alcoholic beverages increased by 3.4%. The price of new cars rose by 3.4 percent, while used vehicles became 6.7 percent cheaper.

Austria is the EU leader when it comes to rising gas prices - and this is also reflected in inflation.

(Bild: APA/GEORG HOCHMUTH)

Energy no longer has a price-dampening effect
"We are currently seeing lower price increases for food and in the catering sector than in previous months. However, electricity and fuel prices are no longer having a price-dampening effect compared to the previous year, but rather a moderate price-driving effect," says Statistics Austria Director General Tobias Thomas in a press release.

Austria leads the way in gas price increases
One reason for this is gas prices, as the Momentum Institute currently calculates with reference to Eurostat figures. While prices in the EU have risen by 65% on average since January 2021, the price of gas in Austria has tripled with an increase of 201%.

The gap to the second-largest increase is also enormous: Latvia saw an increase of 136%. The effect is enormous - almost a third of Austrian households still heat with gas.

Lagging behind in the eurozone
A direct comparison with other EU countries is particularly drastic. Particularly with Germany, where an increase of only 2.2 percent was reported for the same period. In Italy, consumer prices only rose by 1.2 percent.

The situation is quite different in Argentina, where the increase was over 280%, a global record. In the USA, 3.5 percent was registered, in the UK 3.2 percent and in Turkey 68.5 percent in March.

Clothing has become particularly expensive
Excluding expenditure on housing, restaurants and hotels, inflation would only have amounted to 2.3 percent. Apart from this, the main price drivers compared to the previous month of February 2024 were more expensive clothing items (average +10.8%; impact: +0.29 percentage points).

The main reason for this was the switch to the current spring and summer collections, which replaced almost all winter sales goods. Accommodation services proved to be the main price dampener compared to the previous month due to seasonal factors (average -5.0%; impact: -0.08 percentage points).

Daily shopping almost five percent more expensive
The price level of the micro basket of goods, which reflects daily shopping and mainly includes food, but also daily newspapers and coffee in cafés, rose by 4.9% year-on-year in March.

The price level of the mini shopping basket, which reflects weekly shopping and includes fuel as well as food and services, rose by 5.0% year-on-year.

AK critical: "The government is doing far too little"
Finance Minister Magnus Brunner (ÖVP) commented on the figures from Statistics Austria today: "Inflation is already below the level of November 2021. This means that inflation is falling continuously." Tobias Schweitzer, Head of Division at the Vienna Chamber of Labor, countered: "The government is doing far too little to curb the rise in prices."