Wifo predicts that inflation in Austria will only fall to the European Central Bank’s (ECB) target of 2 percent by mid-2026. According to the current inflation forecast, inflation will weaken significantly compared to 2023, from 7.8 percent this year to 3.4 percent and in 2025 to 2.5 percent. Despite this decline, Austria is expected to remain one of the countries with the highest inflation rates in the euro area.
Wage developments are partly responsible for higher inflation in Austria from 2023 than in the euro area – where collective wage increases were considerably more moderate.
Price indexation of rents, mobile phone rates and bank charges also drives up inflation in the service sector.
Real wage increase of 4.2 percent
For 2024, Wifo predicts a real wage increase of 4.2 percent, which will compensate for the real wage loss from the pandemic years 2020 to 2022. The shortage of skilled labor strengthens the position of workers in wage negotiations to enforce their demands.
The economic research institute expects real wage growth to slow between 2025 and 2028, as the gap between the progressive inflation base for wage demands and expected inflation in the following year narrows.
As a result, Wifo also expects unit labor costs to increase significantly, albeit at a decreasing pace (2024: plus 8.1 percent; 2025: plus percent, 2028: plus two percent). Real wages per capita are therefore expected to grow faster than productivity in the forecast period 2024 to 2028.
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.
