Austria’s high inflation will continue in the coming years. This shows the current forecast of the National Bank (OeNB). Inflation will therefore rise to 7.6 percent this year and will remain high in 2023 at 5.0 percent. The OeNB has therefore raised its forecast for March by about two percentage points. The 3.2 percent increase in consumer prices (HICP) in 2024 will again be well above the European Central Bank’s (ECB) target of about two percent, the OeNB expects.
Compared to the March 2022 forecast, the inflation forecast has been revised upwards, mainly due to higher prices for energy and food commodities and higher wage costs due to inflation, the OeNB wrote on Monday.
High commodity prices and the war in Ukraine will push inflation in 2022 to annual levels last exceeded during the first oil crisis in the 1970s. Food prices will rise faster than general inflation this year, at around eight percent. Above-average food inflation of 6.2 percent is also expected in 2023.
“Provided that energy resources are not rationed because of the war in Ukraine, the situation in the energy markets should improve by the end of 2022,” writes the Austrian National Bank, also basing its forecast on falling energy prices.
The calculated core inflation without energy and food will rise to 4.2 percent this year and even 4.7 percent in 2023 due to the high wage agreements. In 2024, at 3.5 percent, it will still be well above the long-term average.
households in very different ways
The OeNB’s analysis shows that inflation does not affect all households equally. However, the effects differ from year to year. In 2020, higher income households tended to experience lower inflation, but that was no longer the case in 2021, with the lowest incomes being slightly less affected by inflation than the higher incomes. While urban residents were more affected by inflation in 2020, households in rural communities were hit harder in 2021 by the dominance of energy prices.
The SNB recommends highly individual solutions to relieve households. Nor can one rely on known links between the social situation of households and how they are affected by inflation. Due to the sharp rise in energy prices, things have probably shifted. “Relationships that existed in low inflation phases no longer hold in the current high inflation phase.”
Last year, inflation was below 0.8 percent for the least affected 10 percent of households, but above 3.6 percent for the most affected 10 percent of households. This difference cannot be explained solely by income. In 2020, for example, single-person households had to deal with higher inflation than multi-person households. By contrast, two-person households without children had the highest average inflation in 2021, according to the OeNB.
Source: Krone
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
