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Austria entered 2026 with a noticeable cooling of inflation, offering a rare moment of relief after years of elevated price pressures. Consumer prices rose by just 2.0 percent in January, a sharp slowdown from December’s 3.8 percent, Statistics Austria confirmed on Wednesday. Month-on-month, prices even declined by 0.7 percent. The eurozone, too, saw easing inflation, with Eurostat reporting a rate of 1.7 percent.
One factor dominated the shift: electricity prices. A year ago, the end of Austria’s electricity price cap had triggered a surge in household energy bills. This January, the comparison base was so high that the effect reversed. Combined with lower electricity taxes, electricity prices fell by 8.2 percent year-on-year. Fuel and heating oil added further downward momentum.
Consumers felt the easing most clearly in everyday purchases. The micro basket of daily goods rose by only 0.4 percent, while the weekly mini basket increased by 0.9 percent. Food and non-alcoholic beverages saw inflation slow to 2.6 percent. Yet not all sectors cooled: restaurants and hotels remained the strongest price drivers, with costs rising by 4.9 percent.
Another subtle factor helped push inflation lower: the annual update of the CPI basket. With new international classifications and revised household spending weights, the index now reflects more current consumption patterns. Without the reweighting, inflation would have been slightly higher. The biggest shift was a drop of more than 2 percentage points in the weight of restaurant and accommodation services. Housing-related expenses, already a heavy component, gained further weight and now make up nearly 21 percent of the basket.
The harmonised European index (HICP), which includes tourist spending, also came in at 2.0 percent.
Politically, the new figures sparked immediate reactions. Government officials hailed a “trend reversal,” arguing that Austria had reached its 2 percent inflation target earlier than expected. Opposition parties countered that the improvement was largely statistical and that households still faced historically high prices for essentials. Trade unions welcomed the easing but urged continued vigilance, calling for permanent price monitoring and reforms to Europe’s electricity market.
- Hector Pascua with reüorts from APA/picture: pixabay.com
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