Energy price dampener

Annual inflation fell significantly last year

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(Bild: INGOSFOTOGRAFIE.DE, stock.adobe.com)

Annual inflation has fallen significantly compared to the previous year. Over the course of 2024, inflation fell continuously from 4.6% in January to 1.8% and leveled off at around 2% over the course of the year. 

Annual inflation in 2024 was therefore 2.9 percent, well below the 7.8 percent increase in 2023. Falling prices for household energy had a particularly dampening effect on prices, while services were still the main price drivers, Statistics Austria reported on Wednesday.

The increase in restaurant prices in the previous year was lower than in 2023, but still significantly higher than the inflation rate. Accordingly, prices in restaurants and hotels were increased by seven percent. Hotel prices rose by 6.3 percent, while goods and services increased by 5.3 percent.

Insurances increase significantly
Insurance became significantly more expensive (up 6.5 percent), while the cost of personal care rose by 4.2 percent. At 2.2%, inflation for housing, water and energy was one-fifth of 2023. The main reason for this decline was the price of household energy, which fell by 6.9% in 2024.

A breakdown of the individual energy sources shows that gas prices fell by 16.8% in 2024. District heating fell by 12.1% and solid fuels by 16.4%. For heating oil, on the other hand, the drop was only 4.7 percent.

Electricity prices, where the electricity price brake, the grid cost subsidy for GIS-exempt households and the supplementary electricity cost subsidy had a dampening effect, rose by 1.2%.

Everyday fixed costs on the rise
At plus 4.3%, housing maintenance recorded an inflation rate that was two-thirds lower than in 2023. Rents (including new rentals) rose by 6.7%. Prices for food and non-alcoholic beverages rose by 2.6%.

According to Statistics Austria, expenditure on transport hardly increased at all. Used cars in particular pushed down inflation, with prices falling by 5.0% year-on-year. New cars became 2.3 percent more expensive. Refueling became cheaper, here the statisticians recorded a year-on-year decrease of 2.2 percent.

"After the highest price increases since the first oil price crisis in 1974 in 2022 (8.6%) and 2023 (7.8%), inflation in 2024 fell to 2.9%, roughly the same level as in 2021. The decline in the inflation rate was stronger in Austria than in most other eurozone countries over the course of the year," said Statistics Austria Director General Tobias Thomas in a press release on Wednesday.