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ECONOMY

The essential products that are getting more expensive in Austria

Record inflation spikes have caused basic supermarket products to become more expensive in the alpine country.

The essential products that are getting more expensive in Austria
Prices are rising in Austrian supermarkets (Photo by ALEX HALADA / AFP)

Austria has been suffering from the high cost of living prices, and inflation for April is expected to reach 7.2 percent, according to a preliminary estimate by Statistik Austria.

Compared to the previous month, the price level is expected to rise by 0.3 percent, the federal statistics office said.

“Life in Austria continues to become noticeably more expensive. In addition to the continuing inflation-determining price increases for fuels and energy products, food also has an additional price-increasing effect,” said Statistik Austria Director-General Tobias Thomas.

READ ALSO: Austria unveils €2 billion relief package to fight the rising cost of living

The increases are very much reflected in supermarket prices.

According to Statistik Austria, oils and fats have had the highest price increases (13.3 per cent in a year on year comparison), followed by vegetable prices (9 per cent in a year on year comparison).

Bread and cereal prices were up by 7.2 per cent, and milk, cheese and eggs prices rose by 5.5 per cent.

Fruits have also been costing 4.7 per cent more in March 2022 than in March 2021. In addition, meat, which is already an expensive product for Austrians, has increased in price by 4.1 per cent.

There were also substantial price increases for non-alcoholic beverages, particularly coffee, which rose 12.3 per cent.

Why is inflation so high?

Prices are rising worldwide, not just in Austria. And much of it has to do with the Russian war on Ukraine, which brings up fuel prices and affects the entire supply chain of several products on supermarket shelves.

However, that is not the only factor.

READ ALSO: Will inflation force tax changes in Austria from 2023?

A special IHS Markit report on food inflation stated that the Russian invasion is just the most recent event exacerbating food inflation, especially as both countries are significant exporters of grains and vegetable oils.

Another factor for rising prices is competition with Chinese demand for feedstuffs such as soybeans, corn, sorghum, wheat and other grains.

Production and logistics issues have also impacted prices globally. For example, adverse weather in Brazil affected the production of corn, soybean, and even coffee.

In addition, transportation issues and even Covid-related labour shortages have also hindered production and logistics and increased prices.

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PROPERTY

Why are young people in Austria so pessimistic about homeownership?

Most young people in Austria do not believe they can afford to buy their own home with their income. Here is why.

Why are young people in Austria so pessimistic about homeownership?

Only 39 percent of young professionals think they can afford their own home with their income, according to a new GPA trade union survey

Around 1000 Austrians aged 16 to 29 participated in the survey, which shows that the expectation of being able to buy property without inheritance or help decreases with age.

Austrians aged 25 to 29 are the most pessimistic

The survey shows that as life and work experience increase, the expectation of being able to buy a home from one’s salary decreases.

Younger Austrians up to 24 years old are more likely to believe they can achieve this (44 percent) compared to Austrians between 25 and 29 years old (30 percent).

The difference becomes even more significant between those still in education (59 percent) and those who are working (33 percent).

Expectations are consistent across both low- and high-income groups.

READ MORE: How can I move into affordable cooperative housing in Vienna?

Young women least satisfied with salary

More than a third of young Austrians find that they have a salary that is too low.

In the survey, 43 percent of women expressed not being satisfied with their earnings, compared to 36 percent of men.

The survey also shows that the participants prioritise choosing educational fields where it is easy to find a job after graduation (86 percent) and where they can experience good earning prospects (84 ).

High prices, rates and strict lending criteria

One of the biggest barriers to owning a home in Austria is the sky-high property prices. Over the years, property prices have increased, making it more difficult for people with an average income to afford a place of their own. 

Another factor making owning a home challenging is the increase in interest rates in recent years. As a result, both existing variable-rate loans and newly obtained fixed-rate loans have become more expensive.

Analysts expect the European Central Bank to cut interest rates by around 0.5 percent in the near future, but according to durchblicker’s calculations, this would initially only create a little relief for loan takers, where instead of around 60 percent, 55 percent of monthly household net income would be needed for debt repayment.

Difficulties obtaining a mortgage

Another issue preventing many from realising their dream to buy a home is the difficulty obtaining a mortgage.

Since July 2022, stricter rules have applied in Austria for the granting of property loans. Loan applicants must have a deposit worth at least 20 percent of the value of their property to be granted a loan.

This means that young professionals need to work for many years and earn a high income to have a chance of being accepted.

READ ALSO: Why buying property in Austria remains unaffordable for most

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