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COST OF LIVING

Austria starts anti-inflation payments with €180 bonus family allowance

As inflation rises, the Austrian government has prepared several one-off payments for families and residents. Here's what you need to know.

Austria starts anti-inflation payments with €180 bonus family allowance
Families in Austria will receive an extra €180 Familienbeihilfe payment in August (moerschy from Pixabay)

Austria’s federal government on Tuesday, August 2nd, announced the first of many one-off payments to cushion the effects of rising inflation in the country, ORF reported.

A €180 per child “special family payment” is ready to be sent out to families in Austria, according to ÖVP government members Susanne Raab and Magnus Brunner. As of tomorrow, the finance offices will transfer the amount per child “directly to the account” of families.

​​”The payment happens automatically, the money comes into the account with the normal family allowance (Familienbeihilfe)”, Raab said.

READ ALSO: EXPLAINED: What you need to know about parental leave in Austria

The Familienbeihilfe is a social benefit paid monthly to every child resident in Austria until they turn 24 – with some exceptions.

The amount depends on the child’s age but can reach €165.10 monthly for one child. Furthermore, since every child is registered for this benefit, the bonus payment can be made automatically.

In total, the government is spending some €340 million on the measures. “Around 1.8 million children in 1.1 million families will benefit”, she added.

Cost of living bonuses

In June, Austria’s government unveiled a series of measures worth billions of euros to fight the cost of living crisis. New steps include increasing family allowances, cutting taxes and sending out one-off welfare payouts, as The Local has reported.

The assistance comes as inflation in Austria hit a record high of 9.2 percent in July, with prices of essential items becoming increasingly more expensive.

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

Other payments are expected for September, when low-income and vulnerable people in Austria, such as pensioners receiving minimum payments and aid recipients, will receive a one-off €300 payment (Teuerungsausgleich) as compensation for inflation.

The most significant payment will be the €500 sum, which consists of €250 as a climate bonus (Klimabonus) and €250 for the “anti-price increase” bonus (Teuerungsbonus). Everyone in Austria will receive that assistance – although children receive half of the total amount – in October.

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Why (and when) double-digit inflation is set to hit Austria

Financial experts in Austria do not expect inflation to slow down any time soon. In fact, they are predicting the opposite. Here's what you need to know.

Why (and when) double-digit inflation is set to hit Austria

In a recent interview, inflation expert Josef Baumgartner forecast that inflation in Austria will hit double-digits in the coming months.

Baumgartner, from the Austrian Institute of Economic Research (WIFO), told Kurier that residents in Austria should prepare themselves for an ongoing increase in inflation due to rising energy prices.

Baumgartner said: “We’re a long way from the all-clear. According to the announcements by Wien Energie and EVN, I expect an inflation rate of more than ten percent by September, and no later than April 2023.”

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

The latest estimate by Statistics Austria shows inflation was already at 9.2 percent in July, as reported by The Local.

This is in stark contrast to predictions made by the European Central Bank earlier this year when it was expected that inflation would fall in the second half of 2022.

How expensive could energy in Austria become?

WIFO expert Baumgartner based his forecast for Austria on wholesale electricity prices, which are currently 247 percent higher than in August 2021, reports ORF

Baumgartner said: “If the energy suppliers pass this on one-to-one, there is a risk of an enormous price increase.”

Additionally, Baumgartner expects prices for electricity and gas to go up by a further 50 percent in September, and was not optimistic that the planned nationwide electricity price cap will be enough to dampen energy prices.

READ MORE: Cost of living: How to save money on energy bills in Austria

He added that federal government intervention must go further to tackle gas and district heating prices.

On August 3rd, EVN and Wien Energie – both part of the Energieallianz Austria (EAA) group – announced they will be increasing energy prices from September.

EVN (which is mostly state-owned) blamed the move on price increases on the international wholesale markets.

According to ORF, Baumgartner believes these planned price increases will further impact the customer price index and push up inflation across Austria, even if the tariff changes only apply to customers in the east of the country.

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