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‘Serious situation’: Inflation in Austria expected to hit 8 percent

Inflation in Austria could hit eight percent in May, new stats show but what is causing the cost of living to rise in the country?

A customer with a €5 note. Products are getting pricier in Germany.
Readers of The Local shared their inflation-busting tips. Photo: picture alliance/dpa | Moritz Frankenberg

The inflation rate in Austria for May is expected to be announced as eight percent, according to a flash estimate by Statistics Austria.

This represents an increase in consumer prices of 1.1 percent from April’s level of inflation and the highest rate in Austria since 1975. 

The consumer price index and further results for May 2022 will be released on June 17th.

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

Tobias Thomas, Director General at Statistics Austria, said: “The increases in energy and fuel prices continue to determine inflation. The last time we saw a higher inflation rate in Austria was in September 1975.”

Flash estimates by Statistics Austria are based on the price data stock at the time of publication. 

A serious situation

Gabriel Felbermayr, President of the Austrian Institute of Economic Research (WIFO), told ORF’s Press Hour on Sunday (May 29th) that the cost of living situation in Austria was “absolutely serious” and called for social benefits to be adjusted in line with inflation.

READ ALSO: EXPLAINED: How to claim your €150 energy discount in Austria

WIFO has upgraded its inflation forecast for 2022 from 5.8 percent to 6.5 percent. The inflation rate in 2021 was 2.8 percent, and in 2020 it was 1.4 percent.

Additionally, Felbermayr does not expect a return to low inflation rates in Austria any time soon. 

A rise in interest rates to beat inflation

As increasing energy prices continue to drive up the rate of inflation in Austria and across the Eurozone, the European Central Bank has announced that interest rates will start to rise in the coming months.

This follows a similar move by the US Federal Reserve and the Bank of England.

READ MORE: Six helpful tips to save money on food shopping in Austria

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Reader question: I’ve received my Austrian Klimabonus as a voucher, now what?

Austria's federal government is sending out €500 payments directly to the bank accounts of millions of people, but many have been getting vouchers. Here's what to do with them.

Reader question: I've received my Austrian Klimabonus as a voucher, now what?

With rising inflation, mainly due to the increasing energy costs, people in Austria have seen their salaries purchasing less and less. Because of that, the federal government announced a €6 billion package with assistance, tax cuts and one-off payments.

The main (and somewhat controversial) payment is the so-called “climate bonus and anti-inflation payment”, better known as Klimabonus in Austria. Residents of the country will receive €500 to help cushion the effects of climbing prices. Minors are entitled to half that amount.

The only criterium is that the recipient must have lived in Austria for at least 181 days in 2022 to be eligible for the payment. It doesn’t matter your nationality or employment status – if you have spent six months legally in 2022 in the country, you will get the money.

READ ALSO: When will Austria make the €500 anti-inflation payment and how do I get it?

Money vs voucher

The main difference between recipients is that some will receive the money automatically in their bank accounts and others will get a mailed voucher.

If your bank data is up to date with Austria’s financial institution FinanzAMT on their FinanzOnline portal, you should receive the payment straight to your account. If not, they will mail you the Klimabonus voucher via a secure letter – meaning you need to be at home to sign for it.

READ ALSO: How could Austria’s new electricity price brake benefit you?

There is also an option to have someone else sign the letter for you via a power of attorney form. You can read more about it here.

Once the voucher arrives and you sign for it, you need to redeem it. After that, it’s possible to use them in hundreds of locations, including supermarkets, bookshops and bookshops to thousands of stores.

READ ALSO: EXPLAINED: How Austria’s new finance measures could benefit you

You can check the nearest location that will accept your vouchers here.

Additionally, you can trade your vouchers (they come as ten €50 vouchers) for cash on the official Bank99, which is the bank owned by the Austrian Post and that can be found in hundreds of the Postal Service’s branches.

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