Austria announces it will issue one-off cost of living payments

Austria has announced it will issue one-off payments aimed at offsetting rising inflation costs in the country.

Austria announces it will issue one-off cost of living payments
Crowds walk down the famous shopping street Mariahilferstrasse, in Vienna. Photo: JOE KLAMAR / AFP

Austria’s National Council has announced one-off payments which will ease the current cost of living crisis for certain financially vulnerable groups, Der Standard reported.

At the end of April, pensioners on minimum incomes, long-term recipients of sickness and rehabilitation benefits, the unemployed and unemployment assistance recipients will receive €150.

Separately households that receive minimum income or social assistance and students with study grants will receive €300.

For retired people receiving supplementary allowances, there will be two payments of €150.

With the exception of the liberal party Neos, the opposition was largely in favour of the legislative changes

However, parliamentarians from opposition parties said the one-off payments would not be enough to compensate for high inflation, especially as Russia’s invasion of Ukraine puts further pressure on prices.

SPÖ politician Gabriele Heinisch-Hosek appealed to the government to at least bring forward the payments by a month.

Neos MP Gerald Loacker said that “one-time payments will not help”, as prices will continue to stay high. 

The government, however, was eager to highlight the benefits of the package.

For those without jobs, it will be at least a “small compensation” for increasing energy costs, Labor Minister Martin Kocher (ÖVP), said. 

According to Statistik Austria, inflation rates in Austria reached 5 percent in January 2022, driven by a spike in fuel and household energy prices

This reflects the highest level of inflation since December 1984, Statistik Austria’s head Tobias Thomas told ORF.

Gas prices rose by 41 percent compared to January 2021 and there also steep hikes in the cost of petrol and diesel fuel. Heizöl, which can be used for heating and fuel, saw a 45.8 percent increase over the same period.

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Bread, butter and veggies: The items getting more expensive in Austria

The purchase price of flour has risen by around 70 percent, which means the cost of bread, cakes and pastries in Austria are set to rise, alongside steep increases for fresh and canned vegetables. Here's what you need to know.

Bread, butter and veggies: The items getting more expensive in Austria

The war in Ukraine and a ban on the export of wheat in India is driving up the cost of wheat flour around the world, with bakers in Austria warning they have no choice but to raise prices.

According to the Chamber of Commerce, there is also a paper shortage for packaging that is used for most baked goods, adding to further pressure on bakers.

Reinhard Honeder, Chairman of Bakers for the Chamber of Commerce, told ORF: “I believe that every colleague must raise their prices if they have not already done so.”

READ ALSO: The essential products that are getting more expensive in Austria

However, the rising cost of wheat flour is not expected to hit Austria as hard as other countries because Austria is “self-sufficient” when it comes to wheat, due to domestic agriculture capabilities.

Honeder says Austria has enough wheat to feed the population and believes this should stop baked goods from becoming unaffordable. 

In Upper Austria, there are around 288,000 hectares of arable land and wheat is currently grown on almost 46,000 hectares, according to Agrarmarkt Austria.

However, global wheat production is forecast to be 774.8 million tonnes for 2022/2023, which is 4.5 million tonnes less than in 2021/2022.

Farmers are also being hit with rising costs for fertiliser and machinery, leading to ongoing increases in the global price of grain.

FOR MEMBERS: Cost of living: 45 ways to save money in Austria

The cost of groceries (Lebensmittel) also on the rise in Austria

Bread isn’t the only staple food product that is becoming more expensive in Austria.

Der Standard reports that the cost of a bell pepper (Paprika), butter and tinned tomatoes are also rising sharply. 

When comparing prices from April 2021 and May 2022, one red pepper (from Austria) is up by 67 percent to €1.49, a 250g pack of Clever butter is 79 percent more at €2.49, and a can of Clever chopped tomatoes costs 20 percent more at €0.47. 

Inflation has been rising in Austria for the past year and hit 7.2 percent in April – the highest rate in Austria since October 1981 when the Gulf War led to an increase in oil prices.

The cost of food is a big driver in the rise in inflation with the average weekly shopping basket costing 14 percent more than last year, according to Statistics Austria.