Austria Inflation

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). Helped by the reduction in VAT on basic foodstuffs from 10.0% to 4.9% starting 1 July, a drop in food prices accounted for about half of the decline in headline inflation. 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.”

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