Quick assessment: Inflation eased significantly in January

In many areas, prices have risen much less than recently, Tobias Thomas, director general of Statistics Austria, said in a press release. Inflation was still 5.6 percent in December.

“The inflation rate has already more than halved from its peak a year ago. In 2024, experts expect a further halving compared to 2023,” said Finance Minister Magnus Bruner (ÖVP).

Graphics: APA/ORF; Quelle: Austrian statistics

Inflation eases slightly in Eurozone

Inflation in the euro zone fell slightly, although from a significantly lower level than in Austria. Consumer prices rose by just 2.8 percent in January compared to the same month last year, EU statistics office Eurostat said in a preliminary estimate on Thursday. Inflation rose to 2.9 percent in December after easing to 2.4 percent in November.

Price growth in the euro zone is now approaching the European Central Bank's (ECB) target of two percent over the medium term. For a good year and a half, the ECB has been facing inflationary pressure with a strong interest rate hike, reaching 10.7 percent in autumn 2022. The ECB is expected to make significant interest rate cuts this year as inflation eases.

A small deduction from core inflation

Core inflation eased further in January, excluding volatile prices for energy and food. It declined to 3.3 percent from 3.4 percent in December. Core inflation reflects core inflation and, according to many economists, reflects the inflation trend better than the headline rate.

Food and beverage prices rose by 5.7 percent at the start of the year after 6.1 percent in the previous month. Energy is again significantly cheaper than it was in the same month last year, although price declines have slowed again. Industrial goods price growth weakened and services rose 4.0 percent from the previous month. Service prices are particularly closely watched by experts and central bankers because of their high wage stake and upcoming rounds of collective bargaining.

Inflation is coming down significantly

Inflation eased significantly at the start of the year. According to Statistics Austria's flash estimate on Thursday, the inflation rate for January is expected to be 4.5 percent. This means it is at its lowest value since December 2021.

Poplar: “A New Beginning for Austria”

Jakob Schwarz, the Green Party's spokesman for budgets and taxes, welcomed the decline in the domestic inflation rate. It shows that “our measures are working to reduce inflation”.

However, SPÖ leader Andreas Popler described the government as a “total failure”. “Record inflation has been falling in recent years, but life … is still unaffordable,” Popler said. “Austria needs a fresh start.” Again he called for a reduction in VAT on basic foodstuffs and an increase in unemployment benefits.

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