Inflation in August Continued to Rise

"This is the highest value since March 2024. Almost all expenditure groups contributed to this increase," said the Director General of Statistics Austria, Manuela Lenk, regarding the inflation in August. In July, the inflation rate was 3.6 percent. The energy sector recorded a particularly strong increase with a plus of 5.9 percent.

Inflation in August: Increase in Electricity Prices and Services

The energy sector in this country recorded a particularly strong increase with a plus of 5.9 percent. On one hand, fuel prices had a significantly less dampening effect on prices than recently, and on the other hand, electricity prices continued to rise. In July, the inflation in energy was still at 4.2 percent. The biggest influence on inflation in August was once again services, which increased by 4.7 percent. They were followed by food, tobacco, and alcohol, whose prices rose by 5.0 percent. Core inflation, consisting of industrial goods and services, was at 3.8 percent in August. In July, the inflation rate year-on-year was still at 3.6 percent. On a monthly comparison, the consumer price index (CPI) rose by 0.2 percent.

The EU-wide comparable harmonized consumer price index (HCPI) for Austria was also at 4.1 percent in August according to the flash estimate, compared to the previous month of July, the index rose by 0.3 percent. In the Eurozone comparison, Austria is thus significantly above the average, the inflation rate in the 20-country community increased in August only to 2.1 percent, after 2.0 percent in July. The European Central Bank (ECB) aims for an inflation of 2.0 percent in the medium term, as it considers this level optimal for the economy in the currency community.

Rolling Inflation Crucial for Autumn Wage Negotiations

The inflation of the past twelve months, from September 2024 to August 2025, is 2.8 percent. Today, it is a flash estimate, the preliminary value will be published by Statistics Austria on September 17, and final figures for August on October 17. The level of annual inflation, also referred to as rolling inflation, is of central importance for the autumn wage negotiations. Because the unions have so far ruled out a settlement below the rolling inflation.

The trade sector is particularly focused on the CPI. For the more than 430,000 retail employees, a two-year agreement was reached last year. They received a 3.3 percent salary increase this year, and in 2026 it is supposed to be 0.5 percent more than the rolling inflation. However, the increase in 2026 decreases with rising inflation and ends at 2.9 percent. If the annual inflation exceeds 3 percent, the social partners want to meet again this year.

Criticism from FPÖ, Union, and Agenda Austria

Criticism of the government from ÖVP, SPÖ, and NEOS came from the FPÖ: "The Austrian inflation is a direct result of the economic policy of Black-Red-Pink," said FPÖ economic spokesperson Barbara Kolm in a statement. They are particularly critical of "the blind obedience to the EU Commission." The Blues demand "profound structural reforms" and "the management of the state's spending excess." Meanwhile, the Greens see "helplessness and inaction" in the government regarding inflation. They urge the coalition to present the announced energy laws. "We need to expand renewable energies and thus lower prices," said the Green budget spokesperson Jakob Schwarz in a statement.

According to the union (ÖGB), a "powerful anti-inflation commission" is necessary to curb inflation, which monitors prices, examines complaints from the population, and implements "effective measures." Additionally, energy suppliers, especially commercial feeders and traders, should be more involved in the network costs, said ÖGB federal manager Helene Schuberth according to a statement.

The economically liberal think tank Agenda Austria sees the problem in excessive state aid. "This has injected a lot of money into the system and kept demand high while supply was scarce," said Agenda Austria economist Hanno Lorenz in a statement. According to the institute's vision, energy providers should be privatized to ensure more competition. "What the economy needs is not more, but less state," said Lorenz.

(APA/Red)

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