Inflation in Austria

A short history of inflation in Austria

The Crown Hyperinflation (1921 to 1922)

Austria's hyperinflation followed the collapse of the Austro-Hungarian empire, which left a small country carrying the debts and the bureaucracy of a large one, with its industrial regions and food supply now behind other countries' borders. The crown lost almost all its value through 1921 and 1922. Stabilisation came from outside: a League of Nations loan in October 1922, granted on condition of budget cuts and a new independent central bank, and the schilling replaced the crown in 1925.

The Hard Currency Policy (1970s onwards)

After 1945 Austria settled on a strategy it kept for half a century, tying the schilling closely to the Deutsche Mark and accepting German monetary discipline as its own. Combined with a system of wage bargaining that traded pay restraint for a say in economic policy, it produced inflation consistently among the lowest in Europe, and Austria joined the euro at its launch in 1999 with little adjustment required.

Post-Covid Inflation (2021 to 2023)

In Austria, prices rose fastest in January 2023, at 11.6%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.