SHARE
COPY LINK
For members

COST OF LIVING

Why (and when) double-digit inflation is set to hit Austria

Financial experts in Austria do not expect inflation to slow down any time soon. In fact, they are predicting the opposite. Here's what you need to know.

Why (and when) double-digit inflation is set to hit Austria
The high cost of living is the biggest concern for international residents in Austria right now, according to the latest survey by The Local. (Photo by Markus Spiske / Pexels)

In a recent interview, inflation expert Josef Baumgartner forecast that inflation in Austria will hit double-digits in the coming months.

Baumgartner, from the Austrian Institute of Economic Research (WIFO), told Kurier that residents in Austria should prepare themselves for an ongoing increase in inflation due to rising energy prices.

Baumgartner said: “We’re a long way from the all-clear. According to the announcements by Wien Energie and EVN, I expect an inflation rate of more than ten percent by September, and no later than April 2023.”

FOR MEMBERS: EXPLAINED: What is Austria’s ‘Tax Freedom Day’?

The latest estimate by Statistics Austria shows inflation was already at 9.2 percent in July, as reported by The Local.

This is in stark contrast to predictions made by the European Central Bank earlier this year when it was expected that inflation would fall in the second half of 2022.

How expensive could energy in Austria become?

WIFO expert Baumgartner based his forecast for Austria on wholesale electricity prices, which are currently 247 percent higher than in August 2021, reports ORF

Baumgartner said: “If the energy suppliers pass this on one-to-one, there is a risk of an enormous price increase.”

Additionally, Baumgartner expects prices for electricity and gas to go up by a further 50 percent in September, and was not optimistic that the planned nationwide electricity price cap will be enough to dampen energy prices.

READ MORE: Cost of living: How to save money on energy bills in Austria

He added that federal government intervention must go further to tackle gas and district heating prices.

On August 3rd, EVN and Wien Energie – both part of the Energieallianz Austria (EAA) group – announced they will be increasing energy prices from September.

EVN (which is mostly state-owned) blamed the move on price increases on the international wholesale markets.

According to ORF, Baumgartner believes these planned price increases will further impact the customer price index and push up inflation across Austria, even if the tariff changes only apply to customers in the east of the country.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ENERGY

From lighting to ice skating: How Vienna plans to save energy

Winter is approaching and with it a higher use of energy. Here’s what the City of Vienna is doing to save gas and electricity this winter.

From lighting to ice skating: How Vienna plans to save energy

As the war in Ukraine continues and energy prices skyrocket, Austria could be in for a tough winter.

To offset some of the impacts, the City of Vienna is now preparing for the cold season and rolling out a series of energy saving measures.

The aim is to reduce energy consumption in the Austrian capital by 15 percent by the end of March 2023, which is in line with the target set by the European Commission earlier this year.

FOR MEMBERS: UPDATED: How reliant is Austria on Russia for energy?

Mayor Michael Ludwig said: “Cooperation in Vienna is the most important basis for getting through difficult times well and safely.

“We proved that during the pandemic and we will prove that now. Our motto is: stick together so that everyone stays warm.”

Here are the main elements of the plan.

Ice skating

The Wiener Eistraum ice skating rink on Rathausplatz is scheduled to run from January to March 2023. But, according to the Wiener Zeitung, there is uncertainty over whether it can take place at all this winter.

The structure on Vienna’s town hall square is a popular winter attraction in the city. It attracts both locals and tourists with pretty lighting and pre-heated ice skates for hire. But it also requires a lot of energy to operate.

As a result, there is a possibility that the Wiener Eistraum could be cancelled or scaled back, although a final decision hasn’t been made yet.

READ ALSO: Reader question: I’ve received my Austrian Klimabonus as a voucher, now what?

Christmas markets

The Wiener Zeitung reports that Vienna’s Christmas market in front of the Rathausplatz is currently not at risk of being cancelled – at least not under the current plans.

The Rathausplatz is the city’s biggest Christmas market and is scheduled to open on November 19th, which is one week later than in 2021.

Lighting

The City of Vienna said the conversion to LED street lighting is continuing across the capital. So far, around half of the city’s 153,000 street lamps have been replaced with LED bulbs. 

The use of street lighting in Vienna has also changed. From 10pm, lighting in low-traffic areas is reduced to 75 percent, and then to 50 percent after midnight.

The LED street lighting project is expected to reduce energy consumption by 60 percent and is part of the city’s long-term energy saving plans.

Administrative buildings, campuses and pools

Energy saving measures are also being rolled out across administrative buildings, at public pools and educational buildings in Vienna.

The Town Hall claims that around 193,000 MWh (or €14.7 million) has already been saved at 42 government buildings, including at kindergartens and schools.

Further energy saving projects are planned for the Jörgerbad, Floridsdorferbad and Kongressbad public pools.

Additionally, the Liselotte-Hansen-Schmidt campuses in Donaustadt, Liesing and Penzing are heated and cooled with geothermal energy. They are also fitted with large photovoltaic systems.

READ MORE: EXPLAINED: How to keep energy bills down in Austria

Investment in the energy network

Between 2022 and 2026, Wiener Stadtwerke Group will invest around €6.2 billion to improve Vienna’s energy infrastructure, with €5.7 billion earmarked for “climate-friendly investments”. 

Wien Energie is investing €1.2 billion into the conversion of the energy system by 2026 and around €400 million is reserved for the expansion of renewable electricity production.

Peter Hanke, City Councillor for Economic Affairs, said: “In addition to the city’s goal of being climate-neutral by 2040, the security of supply for the Viennese is particularly important to me. 

“By 2030, we will invest around €3 billion in the network security of the federal capital Vienna via Wiener Netze. 

“Such a stable power grid makes the integration of renewable energies possible because 90 percent of the energy transition takes place in the distribution grid.” 

SHOW COMMENTS