Austria hardly intervenes directly in prices to curb inflation. Unlike other countries in the eurozone, the government relies on support, according to an analysis by the Momentum Institute.
The data under consideration come from the think tank Bruegel. It is said that Austria only directly intervened in the brake on the electricity price. For the rest, the focus so far has mainly been on one-off payments. “You’re not tackling the inflation problem at the root, you’re just fighting the symptoms,” Momentum economist Marie Hasdenteufel said in a broadcast.
Households would be relieved for only a short period of time, but inflation would not be dampened. In fact, many countries in the Eurozone have so far taken a different path. According to the analysis of the union affiliated institute, most opt for a mix of income and price-cutting measures. Examples are the electricity price cap and the rent price brake in Spain and the gas price brake in Germany. These countries have managed to reduce inflation through direct price interventions.
Austria is struggling with relatively high inflation
Inflation in Austria was 11 percent in February. Most countries that would have used more price reduction tools would have a lower value. The Baltic States are an exception to this, probably mainly due to differences in consumer behaviour. In addition, short-term fluctuations in energy prices have a greater impact on inflation there.
“Other countries have shown how we can combat inflation and relieve households in a targeted way. Instead of continuing to give people money to somehow keep up with the rapidly rising prices, it would make sense to intervene directly in prices,” concludes Hasdenteufel. The Momentum Institute recommends reducing VAT on basic groceries and introducing a rent cap. At the beginning of April, rents increased with reference value rents (especially in Vienna), followed by category rents in June. The think tank also recommends a gas price brake.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
