Austria: Selected Issues
IMF Staff Country Reports, May 13, 2024
Source details
- Canonical URL
- Austria: Selected Issues
Other formats
Bibliographic details
- Published: May 13, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400276101.002
Overview
- Analyzes drivers of core inflation in Austria.
- Notes that inflation in Austria has declined on falling energy prices, but the pace of its return to the two percent target is uncertain.
- Uses two complementary perspectives to assess likely pace of disinflation:
- Differences in inflation trends between core goods and services with relatively high versus relatively low energy-input content.
- A parsimonious econometric model to generate forecasts of core inflation.
Methods and analytical approach
- Comparative analysis of inflation trends by energy-input content:
- Examines core goods and services with relatively high energy-input content versus those with relatively low energy-input content.
- Econometric forecasting:
- Employs a parsimonious econometric model.
- Identifies euro-area inflation as a key determinant of Austrian inflation in the model.
Key findings
- There are good reasons to expect core inflation to keep falling as lower energy prices continue to pass through to core prices.
- Euro-area inflation’s continued decline supports further disinflation in Austria.
- Despite these downward forces, IMF staff do not project Austrian inflation to reach the two percent target for some time, given:
- Inflation’s current elevated level.
- Somewhat sticky services inflation.
Projections and scenarios
- Forecasts generated by the parsimonious econometric model indicate continued disinflation driven by:
- Ongoing pass-through of lower energy prices to core prices.
- Declining euro-area inflation as an external influence.
- No specific numeric forecast values are provided on this page; the overall projection is that the two percent target will not be reached for some time.
Policy implications and considerations
- Monitoring the pass-through of lower energy prices to core goods and services is important for assessing the pace of disinflation.
- Close attention to services inflation dynamics is warranted because of observed stickiness that could delay return to the two percent target.
- Euro-area inflation developments should be factored into national inflation outlooks and policy planning given their model-identified importance.
Content in this bundle
- Austria: Selected Issues; IMF Country Report No. 24/108; April 19, 2024