Annual Report 2004

HICP for Austria: Inflation Rate and Contributions to Inflation
Percentage points
3.0
2.5
2.0
1.5
1.0
0.5
0.0
–0.5
–1.0
1998 1999 2000 2001 2002
Services
Energy
Industrial goods excluding energy
Source: OeNB, Statistics Austria, ECB.
Inflation rose in Austria in the
course of 2004. HICP inflation ran
to 2.0%; core inflation — defined as
inflation exclusive of the components
energy and unprocessed food — stood at
1.6%. Therefore, the annual average
HICP for Austria in 2004 was within
the definition of price stability formulated
by the Governing Council
oftheECB.Theriseintherateof
price increase stems largely from the
contribution of two categories: energy
(+6.9%) and housing, water, electricity,
gas and other fuels (+4.2%).
By contrast, wage moderation — the
wage settlements for 2004 provided
for increases of 2.1% — was instrumental
for price stability.
The defining trends on the labor
marketweretheriseinthenumber
of reported vacancies and above all
the surge in labor supply as a result
of the boom in labor from abroad
and of the pension reforms implemented
in the past few years. Employment
advanced by 0.5% in 2004,
with most of the new positions
createdintheservicesector.More
recently, job shedding in manufactur-
Food, tobacco, alcohol
Headline HICP
The Eurosystem Secures Price Stability
2003 2004 2005
ing and construction also came to a
halt. Nevertheless, the accelerating
recovery failed to offset the aboveaverage
gain in labor supply and
hence to reduce unemployment.
The unemployment rate (Eurostat
definition) came to 4.5% in 2004,
somewhat more than in 2003
(4.3%), despite substantially higher
economic growth.
The current account closed the
year 2004 with a surplus of EUR
0.8 billion (+0.3% of GDP). Animated
export growth (+13.0% in
nominal terms in 2004) shored up
the merchandise and services balances
substantially, which had a surplus
of EUR 4.8 billion, nearly twice that
recorded in 2003. AustriaÕs healthy
export performance hence counteracted
a more pronounced slippage
into deficit of the current account
caused by marginally rising shortfalls
on incomes and transfers. The financial
account posted a surplus of
EUR 1.1 billion in 2004; net capital
inflows on other investment compared
with net capital outflows on
all other subbalances (direct invest-
High energy prices
add most to inflation
Marked enlargement
of labor supply
Vigorous export
growth compensates
for pronounced shift
of the current
account into deficit
Annual Report 2004 ×
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