Inflation in Austria has continued to accelerate. According to Statistics Austria, the inflation rate was 7.7 percent in May – after 7.2 percent in April. In May, the highest inflation rate since April 1976 was reached. Compared to the previous month, the average price level rose by 0.8 percent.
“First estimates of the May value had indicated an increase in consumer prices of 8.0 percent, which has now turned out to be lower due to the reduction in energy taxes on electricity and gas,” Statistics Austria Director General Tobias Thomas is quoted as saying in a press release.
According to the statistics authority, the tax relief had a greater impact on electricity prices than on gas prices. In the case of the latter, the inflation rate was 72.4 percent in May, and electricity even went down slightly by 0.1 percent. Inflation for heating oil is still high at 97.8 percent, but compared to April (+100.4 percent) the dynamic has calmed down somewhat. District heating was 16.5 percent more expensive in May than a year earlier. In general, the price pressure for household energy eased somewhat. In May, the corresponding inflation rate was 25.4 percent after 28.8 percent in April.
Transport costs increased by an average of 19.1 percent. The dominant price drivers here were fuel prices, which rose by 50.5 percent. Flight tickets were 57.3 percent more expensive year-on-year. Used motor vehicles also became significantly more expensive (+24.4 percent), while the price increase for new motor vehicles was somewhat lower (+7.8 percent).
Food prices rose by 8.8 percent. Vegetable prices increased by 12.5 percent. Meat was 11.3 percent more expensive, bread and cereals 8.6 percent more expensive.
Inflation in the euro zone also climbed to record highs
Soaring energy prices are pushing eurozone inflation to record levels. Consumer prices climbed in May by an average of 8.1 percent over the year, as the statistics office Eurostat announced on Friday, thereby confirming an initial estimate. In April and March, inflation was still 7.4 percent.
The inflation rate is now more than four times the target set by the European Central Bank (ECB). The central bank is aiming for 2.0 percent inflation as the optimum level for the economy in the medium term.
Because of the development, the currency watchdogs have now initiated a change of course after a decade of ultra-loose monetary policy. The ECB has announced that it intends to raise the most important interest rates by 0.25 percentage points in July. That would be the first rate hike in eleven years. And further steps upwards are firmly planned. There are already votes from the central bank to raise interest rates even more sharply by 0.50 percentage points at the September meeting. From the point of view of France’s central bank chief Francois Villeroy de Galhau, the ECB must act because the price surge is now broad-based.
According to Eurostat, energy prices rose by 39.1 percent year-on-year in the wake of the Ukraine war in May. Unprocessed food prices climbed 9.0 percent and services rose 3.5 percent. Prices rose across the board, as reflected in the so-called core rate, which excludes volatile energy and unprocessed food prices. That rate increased to 4.4 percent in May. In April, the core rate was still 3.9 percent (apa).