Inflation – How inflation cushioning works

May I introduce? Waldemar; the pet of Maximilian and Susanne Mustermix and their two children, 14-year-old Moritz and Lea, 10. The Ministry of Finance lets the family live in Graz, Susanne receives 2,500 euros gross per month as a full-time employee, Maximilian works part-time. Both commute to their place of work, he could also use public transport, so he receives the small commuter allowance; she needs the car to go to work, so she gets the big one.

The sample mix is ​​the prototypical family that the government uses to calculate the measures it has announced in three stages, which are intended to relieve inflation. Overall, this year this family will be relieved by 4,329 euros. However, the tax measures that were already decided in the previous year but are now being brought forward are also included.

As humorous as the story begins – the quite considerable amount is offset by the enormous additional expenses of this family. And these are at a plus inflation rate in July 9.2 percent compared to the previous year, according to a quick estimate by Statistics Austria. the price driver with June’s already confirmed 8.7 percent inflation being fuel, food and household energy.

Inflation cushioning or lagging behind

The narrative of the government and the opposition parties SPÖ and FPÖ to relieve the strain go in completely different directions. “The rising costs are worrying many people, which we take very seriously,” Finance Minister Magnus Brunner (ÖVP) told the Wiener Zeitung: “We are cushioning the effects of inflation as best we can, but we can do global developments never compensate 100 percent.” In addition to 18 billion euros of eco-social tax reform, four billion euros would come from the anti-inflation packages of January and March of this year and a further 28 billion by 2026 – five of which should already take effect this year.

SPÖ chairwoman Pamela Rendi-Wagner sees it differently: Turquoise-green is “only lagging behind” when it comes to inflation: “The government only checks what is not possible.” They will “not give up” – and will continue to demand price caps on energy, fuel and a suspension of VAT on food. FPÖ federal party chairman Herbert Kickl not only let it be known on the occasion of the price increases by Wien Energie and EVN that this was “modern robber baronship in its purest form”. It is “no longer acceptable that this black-green government rejects price caps for energy, fuel and staple foods”.

Vice Chancellor Werner Kogler (Greens), like the ÖVP, ruled out price caps again and tried to explain why: “Any price cap would only damage Austria billions.” Austrian price supports would not stop at the border, but would also flow into neighboring countries, the “Wiener Zeitung” has already reported on this: “So we would provide half of Europe with our tax billions.”

Energy cost compensation and suspension of additional costs

However, the billions in taxes that the government is taking into its hands are apparently not being perceived to the same extent as inflation. In the first package, it was already 900 million euros that the suspension of the green electricity flat rate and the green electricity subsidy cost.

On the electricity bill of the individual households, however, that amounts to just 110 euros less than in the previous year. In addition, the Mustermix family received 150 euros via the energy voucher, which they could have credited to their electricity provider. For this purpose, the government estimated a total of 600 million euros, which Austrian households “have more to live on,” according to the January broadcast.

However, since the electricity price increase by Steiermark Energie since April 1st, the family has had to pay almost 21 euros more monthly electricity costs with an annual consumption of 4,000 kilowatt hours – this amounts to 185 euros by the end of the year. Seen this way, it would still be a “win” this year.

In the example, however, the Ministry of Finance is apparently assuming that the family has a photovoltaic system on the roof of their house. Since she benefits from the reduction in electricity tax from 1.5 to 0.1 cents according to the Ministry of Finance with 37 euros per year, one should have assumed an annual surplus of 4,000 kilowatt hours, which are fed into the power grid from the system of the Mustermix family every year.

It is therefore likely to be a system with an 8-kilowatt peak that generates 8,000 kilowatt-hours of electricity on average per year, E-Control eco-energy expert Harald Proidl calculates in an interview with the “Wiener Zeitung”. Ideally, the family would be self-sufficient in terms of electricity. However, consumption in summer with more daylight and time away from home is lower than in winter. However, 75 percent of the photovoltaic electricity production takes place in the summer season, so in the winter season the family has to buy additional electricity, “otherwise it will be dark on December 24 after the Christmas tree candles have been blown out,” says Proidl

However, if the family heats their house with gas, an additional 58 euros per month are due in Styria with an annual consumption of 15,000 kilowatt hours – by the end of the year the additional gas costs add up to 232 euros in these four months alone.

Fuel prices and more promotion of commuting

With inflation rates of plus 64 percent for diesel and 55 percent for premium petrol in June compared to the previous year, some fuel bills this year will be in three digits. In Austria, most people drive to work; to be precise, 60 percent of commutes are made by car.

The core of the second package, worth a total of 2.3 billion euros, was the 50 percent increase in the commuter allowance and the quadrupling of the commuter euro by a total of 400 million euros. According to calculations by the “Wiener Zeitung”, Susanne Mustermix has been benefiting from this since May with 35 euros a month, her husband Maximilian receives 20.8 euros more a month.

However, for their 60 kilometers to work, which they cover around 20 times a month, they had to pay more to fill up their diesel cars, which consume around six liters per 100 kilometers: In May, the additional costs with inflation of 56 percent, calculated by the ÖAMTC on the basis of the median values ​​of E-Control, compared to the same month last year according to calculations by the “Wiener Zeitung” for Susanne and Maximilian. In June, refueling for the journey to work cost 58 euros each with an increase of 67 percent compared to June 2021. And in July, with an increase of 64 percent compared to the same month last year, the fuel costs per person were 57 euros more.

Additional costs of 325 euros were offset by 167 euros more commuter flat rate. There is a small commuter allowance for those commutes to work where “the use of public transport is possible and reasonable”. So Maximilian could have switched to public transport and saved fuel costs. One annual pass was at least 34 percent cheaper on average in June than in the previous year.

Two additional family allowances of 180 euros should soon arrive at the Mustermix family, the payment started this week. In the total relief of 4,329 euros, the government also includes the family bonus plus, which is up to 500 euros per child, but this will not be available until the beginning of next year 2023 with the annual adjustment, as well as 500 euros in the cost-of-living tax credit and Maximilian’s social security refund, aka negative tax.

However, energy and fuel costs are also increasing Grocery costs soaring – in June they were 11.3 percent more expensive than in the same month last year. And because of the 50 percent price increase in animal feed, which is reflected in the wholesale prices, the Mustermix family is likely to have to spend more on Waldemar than in the previous year.

Leave a Comment