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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
The high cost of living is the biggest concern for international residents in Austria right now, according to the latest survey by The Local. (Photo by Markus Spiske / Pexels)

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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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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