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Inflation at 9.2% in July: How to beat rising prices in Austria

Inflation for July is expected to be 9.2% in Austria, with essential items becoming increasingly more expensive. Here’s how inflation is impacting international residents in Austria.

Inflation at 9.2% in July: How to beat rising prices in Austria
(Image by LuckyLife11 from Pixabay)

As prices for everything from food to fuel and holidays continue to rise, many people across Austria are starting to notice a strain on the bank balance.

And the situation is not expected to get easier any time soon with Statistik Austria estimating the official rate of inflation for July to be 9.2 percent – the highest level since 1975.

So far, the wave of inflation has mostly affected energy and food prices but has now also arrived in the gastronomy sector, with increasing costs in bars and restaurants across the country.

FOR MEMBERS: How to keep your apartment cool in Austria this summer amid rising energy prices

Tobias Thomas, Director General at Statistik Austria, said: “Inflation has picked up speed in almost all areas. In addition to recent increases in fuel and heating oil prices, we also see significant increases in restaurant and food prices”. 

How is this impacting residents in Austria? And do they have any inflation-beating tips?

The Local put these questions to readers, and this is what they said.

“Slightly, but it’s manageable”

When asked if they were struggling with the rising cost of living in Austria, half (50 percent) of all respondents answered, “slightly, but it’s manageable”.

The second most popular response was “yes” at 40 percent, followed by “no” at 10 percent.

Not surprisingly, a respondent from Croatia who said he is not impacted by the cost of living also noted that he earns more than the average salary. 

Similarly, Stephan from France said he is slightly impacted but cited “no more cleaning lady” as one of the ways he is having to cut back.

For most people though, food, energy (heating and hot water) and fuel (petrol and diesel) were the main items eating into their budget with 75 percent saying they were finding food to be the most expensive. 

READ MORE: When will you get your cost of living ‘bonus’ payments in Austria?

In real terms, this means more people are having to reduce luxuries or other expenses to pay for everyday items like food, which was highlighted by several international residents in Austria.

Andrea from Ecuador, who lives in Vienna, said: “We are eating at home on the weekends and maybe one weekend in the month we can spend in a bar or restaurant.”

Vienna-based Amiri, from the UK, said: “I have to work harder and harder to pay my bills.”

Alfie, another British resident in Vienna, said: “I’m having to cut out certain vegetables from my diet because they are too expensive.”

From a more general perspective, Otto, also in the capital, said his plan to tackle the rising cost of living is: “Save more money, cut expenses to a minimum.”

For others, energy was a concern and Helen in Vienna said the rising cost of living had led to a “mindful usage of utilities”.

Whereas one respondent in Villach, Carinthia, simply said they were not able to put any money away into savings.

“Prepare to be colder this winter”

To counteract a rising cost of living, there are usually two options – make more money or adjust your lifestyle.

For most respondents of the survey, they were aiming for the latter.

Paul Hallam from the USA said his inflation-beating tips are: “Prepare to be colder this winter, avoid using A/C, be mindful of energy and food waste, wash only full loads of clothing and dirty dishes, and eat out less frequently.”

READ ALSO: Cost of living: Why are restaurants getting more expensive in Austria

Paul also said he is “developing better budgeting skills” and using his car less.

Otto in Vienna advised fellow readers of The Local to “read up on minimalism” to beat inflation.

While Afonso from Portugal advised others to “maximise tax efficiencies”, and Mark Hannings in Graz said “maximise use of home office and don’t drive at 130kph on up-hill stretches of motorways.”

Money saving tips to combat rising food prices were also popular with many respondents revealing they are buying cheaper brands, avoiding bio (organic) products, visiting a local market instead of the supermarket or simply “buying less”.

Finally, on a pessimistic note, one Vienna resident said: “Save as much as you can for the worse days.”

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MONEY

EXPLAINED: What is Austria’s ‘Tax Freedom Day’?

People in Austria are working longer to finance government spending, leading to calls for a tax reform. Here's what you need to know.

EXPLAINED: What is Austria's 'Tax Freedom Day'?

Anyone that lives and works in Austria will be aware that this is a high tax country. But what does Tax Freedom Day actually mean?

Here’s a quick explainer.

READ MORE: Over half of Austrians on financially shaky ground: survey

Tax Freedom Day is not a tax-free day

Tax Freedom Day (otherwise known at Taxpayer Memorial Day) is the date when the Austrian population starts working to fund their own pockets, rather than the government’s.

In 2022, it falls on Monday August 15th – one day later than in 2021.

Martin Gundinger, a Research Fellow at the Austrian Economics Center, said: “This means that the Austrian population works seven and a half months exclusively to finance government spending.”

Among OECD countries, Austria has one of the highest wage and non-wage labour costs at 47.8 percent. Only Belgium (52.6 percent) and Germany (48.1 percent) have higher costs than Austria, reports Kurier.

Non-wage labour costs refer to an employer’s expenditure on personnel, such as social security and insurance contributions.

READ ALSO: Where are energy prices going up (again) in Austria?

Calls to reduce the tax burden in Austria

As the Austrian economy feels the heat from the increased cost of living and rising interest rates, there are calls for the federal government to reduce labour costs in Austria.

Christiane Holzinger, Federal Chair of the Young Economy in the Austrian Economic Chamber, said: “Reducing the cost of labour is an essential factor for the workplace and business location – and right now it is the best recipe for an economic upswing.”

READ ALSO: When will you get your cost of living ‘bonus’ payments in Austria?

Likewise, Barbara Kolm, Director of the Austrian Economics Center, is worried that Tax Freedom Day could arrive later each year, which will further increase the economic burden on businesses and employees.

Kolm said: “Rising interest rates lead to higher burden to repay the debt. If there is no willingness for comprehensive reforms, Tax Freedom Day will be pushed back further.”

READ MORE: Vienna forced to dim street lighting and cancel some Christmas illuminations

Gundinger, from the Austrian Economics Center, is also calling for a tax reform in Austria.

He said: “Against the background of the rising inflation rate, a reduction in taxes – along with cuts in government spending – makes sense.”

“Decreasing taxes ensure higher productivity, and if more is produced, this has a price-dampening effect. In this respect, an urgent rethinking of politics is necessary, which is currently trying to counteract this with additional expenditure and special levies.”

Additionally, the New Austria and Liberal Forum (NEOS) is calling for the expansion of state-funded childcare for all children from the age of one to allow more women to enter the workforce on a full time basis.

The NEOS also want to end cold progression (when the tax burden increases but income does not due to inflation) and reduce non-wage labour costs by 6.55 percent.

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