Currently at 3 percent

Inflation at its lowest level since July 2021

Domestic inflation is currently continuing to fall.

(Bild: studio v-zwoelf - stock.adobe.co)

Inflation in Austria continues to fall. In June, it fell to 3.0 percent after a revised 3.3 percent in May - the lowest level since July 2021, Statistics Austria announced on Wednesday. The biggest driver of inflation is currently prices in restaurants and hotels, which rose by 6.9 percent compared to the previous year. There was a decline in energy, with the exception of electricity and oil. Food prices also eased.

Food and non-alcoholic beverages increased in price by an average of 1.7% compared to June 2023, significantly less than the 2.8% increase in May. The main reason for this was food, which rose by a moderate 1.1% in June after becoming 2.7% more expensive in May.

Domestic inflation is currently continuing to fall.

(Bild: studio v-zwoelf - stock.adobe.co)

Meat, vegetables, milk and eggs cheaper
Price pressure eased for meat and vegetables in particular. Fruit, on the other hand, became 4.2% cheaper and milk, cheese and eggs became 0.9% cheaper overall. Non-alcoholic drinks, on the other hand, became 6.1% more expensive.

Even in the biggest price driver, the restaurant and hotel industry, inflation in June was less pronounced than in May. Prices for housing, water and energy rose by an average of 2.5%, roughly the same as in May. While rents rose by 7.2 percent, household energy became 5.3 percent cheaper. The price of gas fell by 16.5 percent, district heating by 16.6 percent and solid fuels by 13.8 percent. Electricity, on the other hand, increased in price by 5.1 percent year-on-year. Insurance, which is usually indexed, cost 7.5 percent more.

Fuel and car repairs more expensive
Prices in the transportation sector rose by 2.0 percent. This was mainly due to the price development of petrol and diesel, which were 4.0% more expensive than in June 2023. People paid 7.2% more for repairs to private means of transport. Prices for airline tickets rose by 12.2% and for new cars by 2.1%. Used cars became cheaper, namely by 7.3 percent.

The EU-wide harmonized inflation rate (HICP) was 3.1 percent, which is slightly higher than the consumer price index (CPI).

Inflation in the eurozone is also falling again slightly
Inflation in the eurozone in general is also falling again slightly. Consumer prices in the 20-country community rose by just 2.5 percent in June within a year, as the EU statistics office Eurostat announced on Wednesday, confirming an initial estimate. In May, inflation had risen to 2.6 percent after 2.4 percent in April. For the European Central Bank (ECB), the target of an inflation rate of 2.0 percent is thus moving a little closer again.

The Harmonized Index of Consumer Prices (HICP) rose the most in Belgium at 5.4 percent and in Romania at 5.3 percent. In Germany, the figure was 2.5 percent. The lowest inflation rate was in Italy at plus 0.9 percent and Finland at plus 0.5 percent.

The fact that prices in the service sector continue to soar is likely to worry the monetary authorities. At the beginning of June, the ECB cut interest rates for the first time in almost five years. It lowered the key deposit rate on the financial market, which banks receive when they park surplus funds with the central bank, from 4.00 percent to 3.75 percent. The key interest rate at which banks in the eurozone can obtain fresh money from the ECB was reduced from 4.5 percent to 4.25 percent.