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Austria: Selected Issues
Author:
International Monetary Fund. European Dept.
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2024: Issue 108
Language:
English
Publication Date:
13 May 2024
DOI:
https://doi.org/10.5089/9798400276101.002
ISBN:
9798400276101
ISSN:
1934-7685
Pages:
48
Keywords:
housing price indicator; core inflation development; housing supply gap; A. looming expenditure pressure; model-implied core inflation; Inflation; Housing; Renewable energy; Women; Europe; Global
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This Selected Issues paper analyzes drivers of core inflation in Austria. Inflation in Austria has declined on falling energy prices, but the pace of its return to the two percent target is uncertain. In order to gain insight into the likely pace of disinflation, this chapter examines key drivers of core inflation from two perspectives. First, it explores how energy prices have affected core inflation by examining differences in inflation trends between core goods and services with a relatively high energy-input content versus those with a relatively low energy-input content. Second, the paper uses a parsimonious econometric model to generate forecasts of core inflation. The paper concludes that there are good reasons to expect core inflation to keep falling as lower energy prices continue to pass through to core prices and as euro-area inflation, a key determinant of Austrian inflation in the econometric model, continues to fall. However, the IMF staff does not project Austrian inflation to reach the two percent target for some time, given inflation’s current elevated level and somewhat sticky services inflation.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund