In addition, Wifo is increasing its inflation forecast for this year from 5.8 to 6.5 percent, according to Felbermayr on Sunday in the ORF “Press Hour”. Social benefits should automatically be adjusted to the high inflation.
Felbermayr on the inflation situation:
“We could be better informed,” said the economist when asked what he knew about the plans of the turquoise-green federal government for gas rationing and distribution that might be necessary. “We don’t really know the details either.” However, it is urgent and needs to be determined now how the energy can be directed. From Felbermayr’s point of view, priority sectors should be defined – first of all and without restrictions households, but also the electricity sector and food production – and within the sectors it must then be further defined how the food is distributed there. Felbermayr suggested that auctions could be used here.
Regarding the dependence of the energy supply on Russia, the Wifo boss says:
“If you think that in the heat of the moment you can determine the distribution democratically, then you will be surprised,” said Felbermayr. “Who should then be turned off in which industry?” he asked in the direction of the government. To say that “everyone gets 30 percent less would not be good from an economic point of view. The costs will be much higher if the rationing of gas ends in chaos,” warned the Wifo boss and warned several times to prepare “now”.
Due to the high inflation, consideration should be given to adjusting social benefits during the year. In general, Felbermayr spoke out in favor of indexing social benefits such as family allowances, minimum income and care allowances and automatically adjusting them to inflation, since “we will not come back to the low rates that we were used to”. Counter-financing could be an inheritance tax, which is treated as a “sacred cow” in Austria.
Once again, Felbermayr called for an end or a reduction in cold progression. In this way, the Minister of Finance can help make collective bargaining easier in the fall. You also have to look at the non-wage labor costs as a whole. The reorganization of unemployment insurance is currently being prepared anyway.
On the subject of cold progression:
Source: Nachrichten
