Inflation Forecast from 2024 till 2028

WIFO Research Brief by Josef Baumgartner
Inflation in Austria is expected to fall significantly from 7.8 (2023) to 3.4 percent in 2024 and 2.5 percent in 2025. The ECB's 2 percent target is likely to be reached in Austria only in mid-2026. In Austria, the elevated persistence of inflation can be attributed to the interplay of price-wage-price effects and indexation.

In 2023, the primary contributors to inflation underwent a shift, with energy prices becoming less significant and the areas encompassed by core inflation (industrial goods and services) assuming greater importance. This pattern is expected to persist in 2024, with labour-intensive services remaining the principal driver of inflation. The extent to which wage increases are passed on to prices is a key factor in this regard.

The inflation differential between Austria and the Eurozone in 2024-25 is likely to be primarily attributable to the higher price increases for services in Austria. The primary causes of this can be attributed to the markedly elevated wage growth and the greater proportion of indexation (including rents, mobile phone tariffs and insurance) in Austria.

Notwithstanding the decline in the rate of inflation and the narrowing of the inflation gap with the euro area, it is likely that Austria will remain within the group of euro area countries with higher inflation rates over the period 2024-25.

WIFO Research Briefs
Finalization: June 2024
Specialist publication: WIFO Research Briefs