Inflation remains high: ten billion euros in purchasing power has been lost since 2022

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Prices in Austria rose by ‘only’ 4.5 percent in January compared to the previous year. That was the lowest value since 2021, but is well above the euro average. And the decline is slow, experts say. Some stubborn price gougers are responsible for this. This costs consumers billions of euros.

Last December our prices rose by 5.6 percent; In January inflation was noticeably lower at 4.5 percent. It was last similarly low in December 2021. So the trend is correct. However, we are still well above the average of the euro countries of only 2.8 percent. The relief for consumers therefore comes too slowly.

“Still a stronghold of inflation”
The Momentum Institute calculates that high prices have cost employees and pensioners more than ten billion euros in purchasing power since 2022. Jan Kluge of Agenda Austria is also critical. “We are still an inflation stronghold. Moreover, inflation in January was always lower than in the rest of the year. B. because the discounts take effect after Christmas. Things usually start to improve from April onwards, for example due to rent increases.”

A price driver in January was restaurants and hotels, which charged 9.1 percent more than a year ago. Without this ‘tourism effect’, total inflation would have been only 3.3 percent. Kluge: “The industry has higher energy costs, employees are scarce and expensive, they are capital intensive, which now costs high interest rates. So the companies had to increase it, and they can. The guests have more money in their pockets because of the government support.”

Some foods such as pastries (+5.1%), vegetables (+10.6%), non-alcoholic drinks (+11%) and newly concluded apartment leases (+9.1%) were also very expensive. Electricity, on the other hand, became cheaper by 4.5% and fuel fell by 4.2%.

Self-made inflation
Things are unlikely to get much better in the coming months, and the brake on electricity prices will expire in early 2025. In general, Austria has had slightly higher inflation than other euro countries for a long time, Jan Kluge explains: “The difference was usually around 0.5 to 1 percentage point, for example due to the influence of tourism. That hardly mattered. Above all, the regulations in rental law and the long-term, favorable energy supply contracts ensure limited inflation. However, this has increased considerably recently, more strongly than in other countries.” But self-made inflation remains…

Source: Krone

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