Austria's Inflation Rate Drops to Two Percent in January, Marking Significant Slowdown
Austria experienced a notable decline in its inflation rate in January, according to preliminary estimates released by Statistics Austria. Consumer prices rose by an average of just two percent compared to January of the previous year. This marks a substantial reduction from December, when the inflation rate stood at 3.8 percent.
The primary driver behind this decrease in inflation has been a widespread reduction in energy prices. The conclusion of the so-called base effect related to electricity, combined with falling prices across the energy sector, contributed significantly to the overall slowdown in consumer price growth. The impact of these changes has returned inflation to levels last seen during the second half of 2024.
Statistics Austria highlighted that the most pronounced downward pressure came from energy sources such as electricity, gas, heating oil, and automotive fuels. Together, these sectors led to a 4.9 percent drop in energy prices compared to the previous year. This single factor alone reduced the inflation rate by approximately 1.2 percentage points compared to December's figures.
Several policy measures were also credited with influencing the lower inflation outcome. The expiration of the electricity price cap, the reduction in energy taxes, and a decreased renewable energy levy at the start of 2026 have all contributed to easing energy costs for consumers and businesses.
In terms of industrial goods, prices showed only a marginal increase of 0.8 percent year-on-year, indicating a stabilization in this segment of the market. The cost of services, while still contributing to overall inflation, saw a reduced impact compared to prior months. Service prices rose by 3.8 percent, a smaller increase than in 2025, when service-related inflation consistently exceeded four percent and exerted greater upward pressure on overall inflation rates.
Food, tobacco, and alcoholic beverages also played a role in the moderating inflation figures. Prices in this category increased by 2.7 percent, a slower pace than in previous periods, which further helped to temper overall inflation.
On a monthly basis, January's price level is expected to be 0.7 percent lower than in December 2025. This month-on-month decline underscores the current trend of easing consumer price pressures in Austria's economy.
Recent data from the wider Eurozone also indicate that inflation has slowed to its lowest level in nearly five years, partly reflecting similar dynamics in energy and goods pricing across member states.
Economic analysts suggest that the current decrease in inflation could provide relief for households and businesses, following the elevated price increases observed throughout 2025. However, they caution that ongoing monitoring will be necessary to determine whether this trend persists in the coming months, as various domestic and international factors may still influence price developments.
The moderation in inflation aligns with a broader pattern of economic stabilization, although sectoral differences remain. Certain regions and industries continue to experience varied rates of economic growth and contraction, reflecting the complex landscape of Austria's post-pandemic recovery. Overall, the latest data offer cautious optimism regarding price stability and purchasing power for Austrian consumers in 2026.