The Oesterreichische Nationalbank (OeNB) sees inflation of 6.9 percent for this year in the light of a rising core inflation rate. And the HICP inflation rate will also remain high in the medium term. 4.0 percent are expected for the coming year, and then 3.1 percent for 2025, said OeNB Governor Robert Holzmann in a broadcast today based on the latest OeNB inflation forecast. The target of the European Central Bank (ECB) would be an inflation rate of two percent.
This year, the inflationary pressure emanating from energy prices has eased significantly. However, the inflation rate is increasingly determined by domestic price pressure, which also stems from the sharp rise in wage costs in recent times.
No ebb in sight
That is why the core inflation rate – that is the inflation rate excluding energy and food – will rise by one percentage point to 6.1 percent in 2023 according to the OeNB forecast. The annual core inflation rate will not fall again until 2024. However, like the HICP inflation rate, it will remain well above its long-term average until the end of the forecast horizon in 2025.
Core inflation (excluding energy and food) reached 5.1 percent last year and will rise to 6.1 percent this year, mainly due to sharp increases in wage costs. In 2024 and 2025, the core inflation rate will fall to 4.3 percent and 3.1 percent respectively, but will remain well above its long-term average.
Also high compared to other countries
The Austrian HICP inflation rate was extraordinarily high in the first two months of 2023, also compared to the euro area, writes the National Bank. It reached eleven percent in February and has thus been in double digits since September 2022. The high inflation differential to the euro area average (8.5 percent) can be attributed to a large extent to the contribution of services. However, the drop in the inflation rate in February – starting from 11.6 percent in January – signals a trend reversal.
