Inflation in Austria eases as energy prices fall

Austria's inflation is finally down from the double-digits, getting to 9.1 percent in March 2023, according to official data. Which prices are dropping?

Inflation in Austria eases as energy prices fall
Inflation slows in the eurozone. Photo: Wance Paleri / Unsplash

The inflation rate for March 2023 is expected to be 9.1 percent, according to calculations by Statistik Austria as part of a flash estimate. 

“In March 2023, inflation fell well below the 10 percent mark again: After 10.9% in February, inflation in March fell to 9.1% according to a first estimate – and thus to the lowest value since June 2022”, said Statistics Austria Director General Tobias Thomas. 

According to him, the main contributors were fuel and heating oil – both energy commodities with prices that rose massively at the beginning of the Ukraine war. However, they have since dropped in price again and are now having a dampening effect on inflation year-on-year.

“The upward trend in food prices is also weakening”, Thomas said.

READ ALSO: How to get Vienna’s €200 energy subsidy in 2023

However, people in Austria are still seeing high household prices, as reported, due to companies passing on higher contractual prices from the height of the crisis. In the next few months, though, gas and electricity costs are also expected to drop, according to a prediction by Austrian regulator E-Control.

Eurozone inflation is still high

As inflation across the eurozone continues to exceed the European Central Bank’s (ECB) two-percent target, the bank is projected to continue raising interest rates. 

However, recent turbulence in the banking industry has emphasised the negative impact of increased borrowing expenses on the economy, and it is unclear how much the ECB will raise rates in the future.

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

After the most recent rate increase of half a percentage point, some experts anticipate that the ECB will opt for a smaller increase at the next meeting in May.

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What cost-of-living payments could residents in Austria receive in June?

As cost-of-living continues to rise in Austria, people in the country can expect several one-off payments and subsidies next month.

What cost-of-living payments could residents in Austria receive in June?

Austria’s inflation rate continues to be at a high level, reaching 9.7 percent in April and is not expected to go down anytime soon. With almost everything in Austria becoming more expensive by the month, the federal government has struggled to cushion inflation effects.

Two measures announced recently should tackle the main villains of the cost of living: high food and energy prices. However, how effective those will be remains to be seen.

READ ALSO: What will become more expensive in Austria in June?

Austrian chancellor Karl Nehammer (ÖVP) has announced that energy companies that don’t pass on lower market energy prices will have to face higher profit taxes. In addition, new regulations will make it so that prices will have to be adjusted more frequently, allowing the drops to reach the final consumers faster.

Regarding the food sector, the federal government announced a “food transparency report”, with the prices of essential food items more available and “comprehensible” to consumers. The idea is that buyers can more easily compare prices, take advantage of market competition and save money.

READ ALSO: What is Austria’s JÖ Karte, and how can you save money with it?

Austria’s government is still continuing its somewhat controversial policy of offering one-off payments, especially to lower-income or at-risk people. For example, some pensioners that have not received their total “pension bonus” of up to €500 due in March will get the remaining payment – about €333 – at the end of June.

In Styria, employees of hospitals and nursing homes will receive additional bonuses, including a €3,000 bonus, €1,500 for nursing staff (the first of three instalments should be paid in June) and €750 for successfully recruiting new staff.

READ ALSO: Vienna Energy Bonus 23: How to get your €200 payout

The so-called “heating allowance”, a one-off payment to help households with their heating and electricity bills, can also be applied directly to the provinces of Upper Austria, Lower Austria and Vienna in June – other regions have already paid out the bonus.

Finally, the increased commuter allowance, which has been valid because of expensive fuel prices for some commuters, will cease to be valid in June 2023. According to the Climate Ministry, a new “gradual” commuter allowance should be introduced in the future.