Austrians have more money – so why aren’t they spending it?

Inflation is easing and real wages are rising, but people in Austria aren’t spending – they’re saving. Why is that and what does it mean?

Despite inflation easing and wages rising, many people in Austria are choosing to save rather than spend. That’s good news for household budgets – but not so great for the economy.

According to an analysis by Bank Austria, reported in Die Presse, the country is now in its third consecutive recession, and one key reason is that consumers are holding back. On paper, Austrians have more purchasing power than they did during the height of the inflation crisis – but that money isn’t flowing into shops, restaurants, or services.

Purchasing power has recovered – at least for some

After nearly three years of real wage losses, incomes are finally catching up to prices. Real wages, which had fallen behind inflation for over two years, have now largely returned to 2020 levels. And in 2025, they’re expected to rise even further.

Economist Walter Pudschedl explained that from mid-2023 onwards, collectively agreed wages began rising faster than inflation. By the end of 2024, many sectors had already regained much of their purchasing power, and with inflation expected to fall to 2.5 percent and wages to grow by 3.9 percent in 2025, real incomes will continue to improve.

Workers in the energy sector, public administration, and certain service industries, such as cleaning and security, have already seen gains.

So why is consumer spending still low?

Instead of spending more, Austrians are saving more. Bank Austria found that households saved more than €33.7 billion in 2024 alone. The savings rate rose to 11.7 percent, while private consumption remained flat.

While this is understandable after years of economic uncertainty, it’s also one of the main reasons Austria’s GDP has continued to contract. If more of this income were going toward consumer spending, the country might have avoided another recession.

Chief economist Stefan Bruckbauer put it plainly: it’s up to domestic consumers to boost the economy, especially since exports are unlikely to help much due to international trade tensions and competitiveness issues.

Not everyone has bounced back

While some groups have recovered, others are still lagging behind. Workers in the financial sector, arts and culture, healthcare and manufacturing are still facing real losses in purchasing power. Wage increases in industries such as automotive manufacturing and metalworking have failed to keep pace with consumer prices.

Not all wage agreements were equal, and some sectors are still playing catch-up. That’s a key reason why not all Austrians feel more financially secure – despite what the statistics say.

Pensioners are especially cautious

Pensioners, too, are feeling the effects. Although smaller pensions were adjusted with one-off payments and targeted increases, those with higher pensions have seen a disproportionate loss of purchasing power. Pension increases in recent years were capped, meaning that larger pensions grew more slowly than inflation.

Bank Austria estimates that the average pension is still about 0.9 percentage points below its 2020 value in real terms. That shortfall, even if small, is enough to affect consumer confidence – particularly among older Austrians, who tend to be more conservative spenders.

A savings habit that’s hard to shake

After years of high inflation, rising energy prices, and economic anxiety, many people have become more cautious with their money. While consumption fell in 2023 due to real wage losses, that excuse no longer applies in 2024. Disposable income rose, but people chose to save it instead.

This shift in behaviour now seems structural: a widespread focus on saving rather than spending – even as conditions improve.

Despite having more money in their accounts, Austrians are not rushing out to spend it – and that’s shaping the country’s broader economic outlook. It seems the scars of inflation and economic uncertainty still run deep.

Austrians have more money – so why aren’t they spending it?

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