Significant increases in fuel prices and higher costs for housing, water and energy pushed June’s headline inflation rate to 2% year on year, from 1.9% YoY in March. According to the harmonised European definition (HICP), headline inflation was even higher, coming in at 2.3% YoY, from 2.1% in May. Strong price increases for restaurants and hotels (higher weightings in the HICP than in the CPI) significantly raised the HICP vis-à-vis the CPI.
Daily life became noticeably more expensive as well. The micro basket, or out-of-the-pocket inflation measure, which represents typical daily shopping purchases, increased by 3.3% year-on-year in June (May 3.8%), while the mini basket, representing weekly purchases and also containing fuel, became 5.5% more expensive in June compared with June last year.
Although prices are on the rise, Austrians keep on spending.
According to a recent ING International Survey, consumer debt is high. The percentage of those claiming to be privately indebted increased by 9% compared to a year before to a total of 49%. Even though official data from the Bank of International Settlement shows that credit to households and non-profit institutions serving households decreased from 50.4% to 49.1%.
According to the survey, Austrians increased indebtedness in all possible instruments, with consumer loans and bank overdraws taking the lion’s share. However, there are regional differences: while the fewest private debtors live in Vienna (44%), 57% of Carinthian households are in debt.
With the economy booming, consumers are likely to continue spending, as a result of which private consumption should remain a strong growth driver throughout the year.