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Prices spiral up less strongly

Predictions that the Austrian inflation will decelerate this year appear to be correct.

Products and services on offer in the country cost 2.4 per cent more last month than in March 2011. This increase followed a price jump of 2.6 per cent between February 2011 and February 2012. The annual inflation soared by 3.3 per cent from 2010 to 2011. The Institute for Advanced Studies (IHS) thinks that that the domestic inflation rate could decline to 2.2 per cent in 2012 while Austrians’ spending power is tipped to edge up by 0.7 per cent from 2011 to 2012.

Last month’s inflation of 2.4 per cent was the lowest monthly rate since January 2011. While fruit and electronic appliances are significantly cheaper at the moment than in the first few months of 2011, the price for coffee and gas went up dramatically. Coffee cost 19 per cent more in March 2012 than in March 2011. People using gas to heat their homes had to pay 11.6 per cent more for the same amount of the resource. An increase of flat rents of 4.4 per cent causes further pressure.

Yesterday’s (Tues) inflation report confirms claims by motorists’ associations. Austria’s politically muscular car clubs ÖAMTC and Arbö made aware of rising fuel prices. The price for petrol rises regardless of developments in global trading, according to the organisations. Statisticians said yesterday that car fuel cost eight per cent more last month than in the same month of last year. One litre of diesel costs around twice as much at the moment in Austria than 10 years ago when drivers had to pay 0.72 Euros for it. Repairs and maintenance of cars became more costly as well, the new inflation figures show.

The eight per cent fuel price jump followed an increase of 10 per cent from February 2011 to February 2012. Gas cost 11 per cent more in February 2012 than in the same month of last year. These upward developments were mainly responsible for the monthly inflation of 2.6 per cent. Last month’s flat rent price hikes were established one month after a 4.3 per cent increase from February 2011 to February 2012.

The Labour Chamber (AK) not only claims that real estate agents and landlords are charging inappropriately high prices. The organisation also accuses Austria’s supermarket companies of keeping prices up without any good reason. AK experts compared the price of 40 common supermarkets products on offer in Vienna and Berlin to find that several items’ prices were much more expensive in Vienna. Especially meat, flour, sugar and milk are significantly dearer in the Austrian than in the German capital, they said.

Michael Blass, who heads the Austrian Foodstuff Industry Association, criticised the chamber for concentrating on Austrian-German price gaps. Blass said the AK should check differences in prices between Austrian shops and stores in northern Italy, Switzerland and the Czech Republic instead. "Austrian households spend 22 per cent more for energy and housing today than five years ago. Food spending rose by just 6.4 per cent at the same time," he said.

It seems highly unlikely that the inflation index for March will cause a strong decrease of car sales in Austria, let along people’s transport and traffic habits. More vehicles than ever before were sold in Austria in 2011 when 356,000 new cars were registered for usage. Half of all the distances Austrians covered by car are no longer than five kilometres (km), according to the Austrian Traffic Club (VCÖ). The organisation and the Green Party want more financial and promotional support for public transport and cycling.

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