VAT reduction is “largely” received by customers

Die Austrian National Bank (OeNB) analyzed food prices available online from the two largest Austrian supermarket chains and a purely online supermarket. The VAT reduction primarily dampens food inflation in the short term.

“The comparison of the price development of products affected by the tax reduction and those not affected shows that the tax reduction was passed on to consumers to a considerable extent in the first week of July,” writes the National Bank in its current “Policy Brief”. The average price reduction corresponds to “almost a complete pass-on of the tax reduction” to consumers.

OeNB will continue to monitor VAT reductions

According to the OeNB, the tax cut will “temporarily slightly dampen” food and overall inflation. The effect on the inflation rate for the entire year 2026 would amount to 0.075 percentage points if the price reductions currently observed remain in place and the tax reduction is not just passed on temporarily.

The OeNB’s web scraping tool monitors several thousand food prices in Austrian supermarkets every day. The National Bank announced on Monday that it would continue to analyze the effects of the VAT reduction in the coming weeks and months.