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Price shock for everyone: Shops warn of new increases in Austria!
Austria's inflation will reach 3.6% in July 2023, price increases and rising costs of living are putting pressure on households.
Price shock for everyone: Shops warn of new increases in Austria!
Austria is currently facing challenges from persistent price increases, which are putting a noticeable strain on household budgets. According to the latest data, inflation was 3.6 percent in July 2023, higher than the euro area average of 2.0 percent. This has a major impact on daily errands, weekly shopping and the approaching start of school. Inflation expert Josef Baumgartner from WIFO estimates that life in Austria will be a third more expensive between 2020 and 2025.
Retail companies are forced to further increase their prices. Franz Kirnbauer from the Lower Austrian Chamber of Commerce also confirms such forecasts, pointing out the pressure on retail companies and reporting impending price increases. The main reason for these increases is increased labor costs, which, according to information from over 90 percent of trading companies, are cited as the decisive cause. But the prices for inputs and materials (58.3%) as well as the rising costs for energy and fuel (48.4%) also contribute to inflation.
Additional burdens for consumers
Consumers are feeling the scarcity of money and are very afraid of further price increases. Kirnbauer is therefore calling for relief for retail companies and more fairness in competition with international online providers. Political demands that have arisen from these efforts include lower non-wage labor costs, less bureaucracy and cheaper energy costs.
Looking ahead, the focus of inflation contributions in 2023 has shifted from energy prices to core inflation, such as industrial goods and services. This trend will continue in 2024, with price increases driven largely by labor-intensive services. A key factor in this context is the passing on of wage increases to final prices.
Forecasts for the coming years
The inflation rate in Austria is expected to remain above the euro area average. According to the forecast, Austria will remain in the group of countries with higher inflation rates within the Eurozone in 2024 and 2025. This is largely due to the significantly higher wage increases in Austria and a larger share of indexed price increases, such as in rents, mobile phone tariffs and insurance.
The developments over the next few months will be crucial for how consumers react to the associated economic challenges. Many are already worried about whether their purchasing power will continue to be sufficient to cover everyday needs.