Figures and data in Inflation and Government Response – Distributional Impact on Austrian Households

Abstract

Austrian consumer prices rose by 8.6% in 2022, followed by a 7.8% increase in 2023, with projections indicating a 4.0% rise in 2024. In response, the Austrian government introduced various support measures targeted at households, amounting to between 1.3% and 1.6% of GDP per year from 2022 to 2024. We use the tax-benefit microsimulation model EUROMOD and statistically matched data from the Household Budget Survey to analyse the effects on disposable income and expenditures. Households with lower income are on average more heavily affected by inflation, primarily because of their higher average propensity to consume. In total, relief is disproportionally allocated to the upper half of the income distribution in absolute terms, but relative to income it is higher in the lower deciles. Together with nominal increases in other sources of income, on average, households receive enough income to cover their additional expenditures. However, as there is significant heterogeneity across households, this result does not hold for all households, particularly not for those in the lower parts of the income distribution.

This article contains 5 figures and 7 tables.

Figures

**Figure 1.** Development of the Consumer Price Index in Austria.

**Figure 2.** Inflation rates across the income distribution.

**Figure 3.** Relief relative to equivalised disposable income.

**Figure 4.** Heterogeneity of income support.

**Figure 5.** Change in income and expenditure compared to 2021 (in excess of 2% annual growth)

Tables

Table 1. Components of consumption across the income distribution.

	Inflation			Share of consumption in deciles of disposable income
	2022	2023	2024	D1	D2	D3	D4	D5	D6	D7	D8	D9	D10	total
Services	4.6%	7.9%	5.4%	47%	49%	45%	46%	46%	46%	44%	47%	46%	47%	46%
Industrial goods	7.4%	7.6%	4.4%	25%	27%	29%	31%	33%	31%	34%	33%	34%	35%	32%
Food incl. alcohol & tobacco	9.0%	10.1%	4.3%	19%	16%	17%	15%	14%	15%	14%	13%	13%	12%	14%
Energy (electricity, gas etc.)	31.0%	20.5%	-6.6%	6%	5%	5%	4%	4%	4%	4%	4%	3%	3%	4%
Energy (fuel)	46.6%	-9.0%	-6.6%	3%	3%	4%	3%	3%	4%	4%	4%	4%	3%	4%
Total	8.6%	7.8%	4.0%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%

Source: Statistics Austria, IHS, WIFO macroeconomic forecast December 2023, Household Budget Survey 2020, authors’ calculations.

Table 2. Underlying forecast.

	2019	2020	2021	2022	2023	2024	2020	2021	2022	2023	2024
	index (2019=100)						change (year-over-year in %)
real GDP nominal GDP consumer prices indexation of income tax brackets	100.0 100.0 100.0 100.0	93.4 95.9 101.4 100.0	97.3 102.0 104.2 100.0	102.0 112.6 113.2 100.0	101.2 121.4 122.1 105.2	102.1 128.0 127.0 115.6	-6.6 -4.1 +1.4 0.0	+4.2 +6.4 +2.8 0.0	+4.8 +10.4 +8.6 0.0	-0.8 +7.8 +7.9 +5.2	+0.9 +5.4 +4.0 +9.9
average annual wage indexation of pensions property income	100.0 100.0 100.0	102.2 101.8 51.5	104.9 103.3 70.7	109.9 105.2 97.7	118.9 111.3 106.4	128.2 122.1 113.1	+2.2 +1.8 -48.5	+2.7 +1.5 +37.2	+4.7 +1.8 +38.3	+8.2 +5.8 +8.9	+7.8 +9.7 +6.3
population employed unemployed pensioners	100.0 100.0 100.0 100.0	100.4 98.0 135.9 103.1	100.8 100.4 110.1 104.8	101.8 103.3 87.3 106.1	102.6 104.5 90.0 107.4	103.2 105.2 91.0 109.0	+0.4 -2.0 +35.9 +3.1	+0.4 +2.5 -19.0 +1.7	+1.0 +3.0 -20.7 +1.2	+0.8 +1.1 +3.0 +1.3	+0.6 +0.7 +1.1 +1.4

Source: Statistics Austria, WIFO macroeconomic forecast December 2023, authors’ calculations.

Table 3. Government measures to support households.

	Categorisation			Total relief volume in % of GDP
	means-tested (yes/no)	type	temporary or permanent	2022	2023	2024
Income support				1.28	0.82	1.39
One-off payments to all households				0.70	0.00	0.00
Increase of a lump-sum climate bonus	no	transfer	temporary	0.62	0.00	0.00
Transfer for electricity bill	no	transfer	temporary	0.09	0.00	0.00
One-off payments to low income households				0.35	0.27	0.01
One-off payments to vulnerable households	yes (household)	transfer	temporary	0.05	0.01	0.00
One-off payments to unemployed persons	yes (person)	transfer	temporary	0.05	0.00	0.00
Tax credit for employees and self-employed	yes (person)	tax	temporary	0.16	0.00	0.00
One-off payments to pensioners	yes (person)	transfer	temporary	0.09	0.11	0.00
Transfer for housing and heating	yes (household)	transfer	temporary	0.00	0.15	0.01
Measures for families				0.15	0.04	0.07
One-off payment per child	no	transfer	temporary	0.08	0.00	0.00
One-off payment per child to vulnerable families	yes (household)	transfer	temporary	0.00	0.04	0.07
Earlier increase of a child tax credit	no	tax	temporary	0.06	0.00	0.00
Increase of a child tax credit for low income earners	yes (household)	tax	permanent	0.01	0.01	0.00
Increase of commuter tax allowances and credits	no	tax	temporary	0.07	0.05	0.00
Indexation of income tax brackets	no	tax	permanent	0.00	0.38	1.12
Indexation of further social transfers	no	transfer	permanent	0.00	0.07	0.19
Price reduction				0.12	0.47	0.26
Energy tax measures				0.09	0.07	0.07
Reduction of tax rate on electricity and gas	no	tax	temporary	0.05	0.07	0.07
Delayed introduction of CO₂-price (non-EU-ETS)	no	tax	temporary	0.04	0.00	0.00
Electricity price subsidy				0.03	0.40	0.18
Price cap for basic electricity consumption	no	subsidy	temporary	0.03	0.33	0.18
Subsidy of power grid loss cost	no	subsidy	temporary	0.00	0.07	0.00
Total in % of GDP				1.40	1.29	1.64
Total in million €				6,264	6,228	8,351

Source: Authors’ calculations using EU-SILC 2020, Household Budget Survey 2020, and EUROMOD.

Table 4. Categorisation of measures.

	2022		2023		2024
	in % of GDP	share in category	in % of GDP	share in category	in % of GDP	share in category
Total	1.40		1.29		1.64
Type of measure
Transfer measures	0.97	69%	0.38	29%	0.26	16%
Tax measures	0.40	29%	0.51	40%	1.20	73%
Subsidy measures	0.03	2%	0.40	31%	0.18	11%
Means-testing
Means-tested measures	0.37	26%	0.31	24%	0.08	5%
Non-means-tested measures	1.04	74%	0.98	76%	1.56	95%
Permanent or temporary
Permanent Measures	0.01	1%	0.46	36%	1.31	80%
Temporary Measures	1.39	99%	0.83	64%	0.33	20%

Source: Authors’ calculations using EU-SILC 2020, Household Budget Survey 2020, and EUROMOD.

Table 5. Distribution of relief volume 2022 to 2024.

		Share of relief volume in deciles of disposable income
Relief volume in million €	Total	D1	D2	D3	D4	D5	D6	D7	D8	D9	D10
All measures for private households	20,840	9%	10%	9%	9%	9%	10%	10%	10%	11%	12%
Income support	16,720	9%	10%	9%	9%	9%	9%	10%	10%	11%	12%
One-off payments to all households	3,170	10%	10%	10%	10%	10%	10%	10%	10%	10%	9%
One-off payments to low income households	2,900	17%	18%	14%	11%	10%	8%	8%	7%	5%	3%
Measures for families	1,260	26%	20%	9%	10%	9%	7%	7%	5%	4%	3%
Increase of commuter tax allowances and credits	550	0%	2%	3%	4%	6%	10%	11%	18%	21%	24%
Indexation of income tax brackets	7,530	2%	5%	7%	8%	9%	10%	12%	13%	15%	19%
Indexation of further social transfers	1,300	13%	13%	11%	12%	11%	10%	10%	8%	7%	5%
Price reduction	4,130	10%	10%	10%	10%	10%	10%	10%	10%	10%	11%
Energy tax measures	1,140	8%	9%	10%	9%	9%	10%	10%	10%	11%	14%
Electricity price subsidy	2,980	10%	11%	10%	10%	10%	10%	10%	10%	10%	10%

Source: Authors’ calculations using EU-SILC 2020, Household Budget Survey 2020, and EUROMOD.

Table 6. Decomposition of inflation burden.

	Total population	Deciles of disposable income
	Total population	D1	D2	D3	D4	D5	D6	D7	D8	D9	D10
Year 2022	Burden of inflation since 2021 (in excess of 2% p.a.), in % of disposable income
Total burden	5.1	8.7	6.9	6.3	6.0	5.4	5.4	5.1	4.8	4.5	3.5
Effect of average inflation	5.1	9.5	7.1	6.0	5.8	5.5	5.3	5.0	4.7	4.4	3.6
Effect of idiosyncratic inflation	0.0	-0.8	-0.1	0.2	0.0	-0.1	0.1	0.1	0.0	0.1	-0.1
Effect of changes in population	0.0	0.1	-0.1	0.0	0.1	0.0	0.0	0.0	0.0	0.0	0.0
		Deviation from total population, in percentage points										mean absolute deviation	standard deviation
Total burden		3.6	1.8	1.2	0.9	0.3	0.3	0.0	-0.3	-0.6	-1.5	1.1	1.4
Effect of average inflation		4.4	2.0	1.0	0.8	0.4	0.2	-0.1	-0.3	-0.7	-1.4	1.1	1.5
Effect of idiosyncratic inflation		-0.8	-0.1	0.2	0.1	-0.1	0.1	0.1	0.0	0.1	-0.1	0.2	0.3
Effect of changes in population		0.1	-0.1	0.0	0.1	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.1
Year 2023	Burden of inflation since 2021 (in excess of 2% p.a.), in % of disposable income
Total burden	9.7	17.8	13.7	11.7	11.4	10.2	10.3	9.6	9.1	8.2	6.9
Effect of average inflation	9.7	18.1	13.5	11.5	11.2	10.5	10.1	9.6	9.1	8.4	7.0
Effect of idiosyncratic inflation	0.0	-0.3	0.3	0.1	-0.1	0.0	0.1	0.1	0.0	-0.1	-0.1
Effect of changes in population	0.0	0.0	-0.1	0.0	0.3	-0.3	0.1	0.0	0.1	-0.1	0.0
		Deviation from total population, in percentage points										mean absolute deviation	standard deviation
Total burden		8.1	4.0	2.0	1.7	0.5	0.6	-0.1	-0.6	-1.5	-2.8	2.2	2.9
Effect of average inflation		8.3	3.8	1.8	1.4	0.7	0.4	-0.1	-0.6	-1.3	-2.7	2.1	2.9
Effect of idiosyncratic inflation		-0.3	0.3	0.1	0.0	0.0	0.1	0.1	0.0	-0.1	-0.1	0.1	0.2
Effect of changes in population		0.0	-0.1	0.0	0.3	-0.3	0.1	0.0	0.1	-0.1	0.0	0.1	0.1
Year 2024	Burden of inflation since 2021 (in excess of 2% p.a.), in % of disposable income
Total burden	11.1	20.6	15.6	13.0	12.6	12.0	11.6	11.0	10.4	9.4	8.0
Effect of average inflation	11.1	20.7	15.4	13.2	12.8	12.0	11.5	11.0	10.4	9.6	8.0
Effect of idiosyncratic inflation	0.0	-0.3	0.1	0.0	-0.2	0.1	0.1	0.1	0.0	-0.1	0.0
Effect of changes in population	0.0	0.2	0.0	-0.2	0.1	0.0	0.0	-0.1	0.0	0.0	0.0
		Deviation from total population, in percentage points										mean absolute deviation	standard deviation
Total burden		9.5	4.5	1.9	1.5	0.9	0.5	-0.1	-0.7	-1.7	-3.1	2.5	3.4
Effect of average inflation		9.5	4.3	2.1	1.7	0.9	0.4	-0.1	-0.7	-1.5	-3.1	2.4	3.4
Effect of idiosyncratic inflation		-0.3	0.1	0.0	-0.2	0.1	0.1	0.1	0.0	-0.1	0.0	0.1	0.1
Effect of changes in population		0.3	0.0	-0.2	0.1	0.0	0.0	-0.1	0.0	0.0	0.0	0.1	0.1

Source: Authors’ calculations using EU-SILC 2020, Household Budget Survey 2020, and EUROMOD.

Table A3. Decomposition of income changes.

	Total population	Deciles of disposable income
	Total population	D1	D2	D3	D4	D5	D6	D7	D8	D9	D10
Year 2021	Income components, in % of disposable income
Earned income	66	32	40	52	60	65	63	68	74	73	76
Pension income	21	23	29	29	23	24	26	22	18	18	14
Unemployment income	2	14	7	5	4	2	2	1	1	0	0
Other income	11	31	24	13	13	9	9	9	7	8	9
Year 2022	Income changes without fiscal measures since 2021, in % of disposable income
Nominal change in excess of 2% p.a.	1.3	-0.3	0.7	1.0	1.0	0.7	0.9	0.8	1.1	1.7	2.8
Contribution of earned income	2.3	3.0	1.7	1.8	2.3	0.7	2.7	1.4	2.2	2.7	3.0
Contribution of pension income	0.0	0.1	1.1	1.0	0.4	1.3	-0.6	0.2	-0.2	-1.2	-0.3
Contribution of unemployment income	-0.5	-3.6	-1.5	-1.1	-1.1	-0.3	-0.2	-0.2	-0.1	0.0	-0.1
Contribution of other income	-0.4	0.2	-0.6	-0.7	-0.7	-0.9	-0.9	-0.6	-0.8	0.2	0.1
Year 2023	Income changes without fiscal measures since 2021, in % of disposable income
Nominal change in excess of 2% p.a.	5.2	2.6	3.9	4.1	4.3	4.2	4.4	4.5	5.0	5.8	7.5
Contribution of earned income	5.3	4.6	1.6	5.0	4.3	2.3	4.8	5.0	6.0	6.7	7.4
Contribution of pension income	0.7	1.5	4.1	0.2	2.0	3.4	0.1	0.9	-0.1	-1.0	-0.2
Contribution of unemployment income	-0.4	-3.1	-1.1	-1.0	-1.0	-0.3	0.0	-0.2	-0.1	0.0	-0.1
Contribution of other income	-0.4	-0.4	-0.7	-0.2	-1.0	-1.2	-0.5	-1.2	-0.7	0.0	0.4
Year 2024	Income changes without fiscal measures since 2021, in % of disposable income
Nominal change in excess of 2% p.a.	10.0	7.4	8.9	8.9	9.1	9.0	9.2	9.1	9.5	10.5	12.7
Contribution of earned income	8.4	7.4	5.6	6.6	8.0	5.6	8.2	7.7	8.3	9.7	11.3
Contribution of pension income	2.1	2.4	3.4	3.4	3.4	4.6	1.4	2.3	1.9	0.5	1.2
Contribution of unemployment income	-0.3	-2.3	-0.8	-0.9	-0.8	-0.1	0.1	-0.1	-0.1	0.1	0.0
Contribution of other income	-0.3	-0.1	0.7	-0.2	-1.4	-1.1	-0.5	-0.8	-0.6	0.3	0.3

Source: Authors’ calculations using EU-SILC 2020, Household Budget Survey 2020, and EUROMOD.