Austria: Inflation slows in July from the prior month
Latest reading: Harmonized consumer prices increased 2.7% in annual terms in July, following a 3.2% rise in the previous month.
Relative to the previous month’s data, there were milder price pressures for food and non-alcoholic beverages (-0.5% in annual terms vs +1.1% in June), transportation (+7.4% vs +7.5% in June), housing and utilities (+2.6% vs +2.8% in June) and recreation (+1.5% vs +2.0% in June). In contrast, price pressures were higher for restaurants and hotels in July (+3.9% vs +3.8% in June).
A drop in food prices accounted for about half of the decline, helped by the reduction in VAT on basic foodstuffs from 10.0% to 4.9% starting 1 July.
Meanwhile, consumer prices increased 2.8% in annual terms in July, following a 3.2% increase in the prior month.
Finally, harmonized consumer prices declined 0.39% in July in month-on-month terms, following a 0.24% decline in the prior month.
Panelist insight: On the inflation outlook, EIU analysts commented:
“We expect EU harmonised inflation to remain elevated in 2026 at an annual average of 3%. It will then ease to 2.3% in 2027 and an annual average of 2% in 2028-30, as the inflationary effect of the Iran conflict fades. The main risk to our forecast is the length of the war. Austria is primarily affected by higher energy prices and supply-chain disruptions.”