1. Price development
Since February 2022, consumer prices all around the world began to increase at the highest rates in the last 50 years. Among the causes for the high inflation rates are on the one hand after-effects of the Covid-19 crisis and on the other hand the Russian invasion of Ukraine. The consequences are increases in the cost of raw materials and supply chain disruptions that further drive up prices. According to the latest inflation forecast of the Austrian Institute of Economic Research (WIFO) from October 2022 the inflation dynamics will continue till mid 2023: The inflation rate predictions based on the Harmonised Index of Consumer Prices (HICP)2) for Austria in 2022 and 2023 are 8.4 percent and 6.6 percent, respectively. For the euro area the respective numbers are 7.6 percent and 4.0 percent, according to the European Economic forecast of Summer 2022. However, the tenor among Austria inflation experts is rather cautious: a quick return to significantly lower inflation rates is not likely. Especially energy prices are expected to further contribute to high inflation rates. This situation is partly self-inflicted, since progress in the field of energy transition towards renewable energy sources has been slow and there was little diversification in the source of supply of natural gas.
