Inflation in Austria after Accession to the EU

Austria's accession to the EU was widely expected to bring about immediate reductions in many prices. Though food prices have fallen, the reductions have turned out to be smaller than expected, and the drop in the inflation rate was disappointingly small. It is still too early, however, to evaluate the price effects of Austria's membership in the EU. Joining the EU means increased competition for Austria's producers, an effect that permeates the whole economy and will take some time to reach the consumer price level. Some of the price effects may have already been anticipated in 1994 or were initiated by membership in the European Economic Area. Moreover, the problem of assessing the EU price effects is compounded by two other factors which have been affecting the Austrian economy for some time now: large changes in exchange rate of the schilling vis-à-vis major currencies and a regulations regarding recycling of packaging.