Austria’s inflation rate rose sharply in 2025, intensifying pressure on households and leaving the country among the eurozone’s worst performers. According to Statistics Austria, consumer prices increased by an annual average of 3.6 percent, “noticeably higher than in almost all other euro-area countries,” government economists said.
Much of the renewed inflation was felt where it hurts most: at home. Housing costs continued to climb, with rents rising steadily throughout the year, adding strain for tenants already grappling with higher living expenses. Electricity prices surged as well, after a series of government relief measures expired at the beginning of 2025. The end of the electricity price cap, grid cost subsidies for low income households, and special support for large families removed key buffers that had previously kept prices in check.
At the same time, grid fees and the electricity tax were increased, while renewable energy surcharges were reintroduced. These changes combined to make electricity a major driver of inflation. Gas prices also became less price dampening, with similar trends observed for district heating and solid fuels, further pushing up household energy bills.
Food prices added to the burden. The cost of food and non alcoholic beverages rose by 3.7 percent, markedly faster than in 2024. Statistics Austria attributed the increase largely to higher prices for everyday staples such as milk, cheese, and eggs, as well as a sharp rise in meat prices.
Chancellor Christian Stocker responded by pledging determined action against what he called “much too high” inflation. “The government will continue to make every effort,” he said, outlining his so called “2-1-0 formula,” aimed at bringing inflation down to 2 percent this year.
Stocker said a planned reduction in value added tax on basic food items would ease consumer pressure, alongside targeted energy measures. These include lowering the electricity levy, curbing grid costs, and passing a new low cost electricity law.
“These measures will take effect,” the chancellor said, expressing optimism that 2026 could become “the year of economic recovery” for Austria.
