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Recent inflation developments in Austria – an analysis based on different decomposition frameworks

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Abstract

In this paper we show that decomposing national accounts deflators such as the GDP deflator as a proxy for consumer price inflation can lead to misleading results. We compare the decomposition of the value-added deflator, the GDP deflator and the total supply deflator with a HICP decomposition proposed by Schneider (2024). We discuss the differences between these concepts in detail. We find that imports and wages account for the bulk of the differences. Most importantly, the surge in import prices in late 2021 pushed up HICP inflation but had no direct impact on the GDP deflator. Furthermore, we find that wage developments have a much higher impact on the GDP deflator than the HICP. In both 2023 and 2024, the contribution of wages to the GDP deflator was higher than for the HICP even though the latter index increased stronger in both years. We also look at the role of profits. While they were soaring in 2022 and contributed somewhat to inflation, they cratered in 2023 and particularly in 2024.

Suggested Citation

  • Lukas Reiss & Martin Schneider, 2025. "Recent inflation developments in Austria – an analysis based on different decomposition frameworks," OeNB Bulletin, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/24-2, pages 1-15.
    • Handle: RePEc:onb:oenbbu:y:2025:i:q4/24-2:b:1
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    Keywords

    inflation; profit share;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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