INFLATION ANALYSIS

INFLATION RATE OF AUSTRIA FROMT THE YEAR 2009 to 2011

3.50%
3.22% 3.29%

3.00%

2.50% 2.49%

2.00%
1.81%

1.50%

1.00%

0.50% 0.51%

0.00%
2008 2009 2010 2011 2012

As per the latest estimates on real GDP growth, the global economy appears to have weathered its
worst slowdown since World War II. In the third quarter of 2009, most developed countries started to
rebound as a result of large stimulus programs and the surge of emerging economies. About the fact
that the projections are positive, the issue of poor foreign demand persists.

In 2009, Inflation rate declined from 3.22% in 2008 to 0.51% in 2009. The major cause for this decline is
an increase of the average unemployment rate at the end of 2009. Inflation rate and unemployment
rate have maintained an inverse relationship. And does negatively impact the economic recession on
retail sectors that have been mitigated by relatively strong wage increases, low inflation, gradual tax
reform, and fiscal incentives to purchase vehicles. Retail revenues are forecast to increase by about 1%
this year. Thus, according RZB, the optimistic trend can wane as the number of unemployed rises, and
actual wage growth is slow or non-existent. And even in the midst of the slow fall in oil markets,
deflation seemed to be a possible for 2009. As price of oil stabilized in recent months, annual inflation
fell to about 0.5%, the biggest decline in 50 years
In 2010, Inflation rate increase from 0.51% in 2009 to 1.81% in 2010. The cause for the increase is the
Gross Domestic Product (GDP) in Austria grew compared to the previous year. This figure is 56 tenths of
a percent higher than the 2009 figure of -3.8 percent. And overtime, the growth in GDP will likely cause
an increase in inflation. The reason for this is consumers will put more money in a society that inflation
is rising because they believe it will be less valuable in the future. The unemployment rate for this year
had also decreased and has also caused a higher inflation rate.

In 2011, Inflation rate increases from 1.81% in 2010 to 3.29% in 2011. The reason being is as Austria's
Gross Domestic Product increased by 2.9 percent in 2011 from the previous year. And according to a
research, this statistic is 11 tenths of a point higher than the 1.8 percent figure released in 2010.
Moreover, the unemployment rate in the said year has also decreased. And as Inflation is directly
proportional to the increase in GDP, and is inversely proportional to the unemployment rate.

Reference:

World Bank, World Development Indicators. (2019). Austria: Inflation. Retrieved from,
https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?end=2019&locations=AT&start=2009

Barnes, R. (2020, November 02). The Importance of Inflation and GDP. Retrieved from,
https://www.investopedia.com/articles/06/gdpinflation.asp

Depersio, G. (2020, August 22). What Happens When Inflation and Unemployment Are Positively
Correlated? Retrieved from, https://www.investopedia.com/ask/answers/040715/what-happens-when-
inflation-and-unemployment-are-positively-correlated.asp