Austria and Germany grapple with cost‑of‑living crisis amid soaring inflation

In Germany, a public poll asking what items should be affordable for an “acceptable minimum living standard” has sparked debate. The questionnaire omits luxury goods such as cars and travel, while reports of basic food shortages and rationing show the crisis deepening and the shadow economy expanding.

In Austria, inflation peaked at 8.6% in 2022, prompting one‑off cash payments, unusually high wage settlements and record household savings of €34 billion in 2024. The current coalition reduced VAT on selected staple foods from 10% to 4.9% as of July 2026. Retailers largely passed the cut to consumers, but the measure only modestly softens overall price pressures because the affected items represent a small share of household spending.