Austria's Ruling Parties Reach Deal to Tackle Petrol Prices

Austria's ruling parties have agreed to extend a mechanism to cushion higher petrol prices. The agreement trims petrol tax and margin reductions, seeking to address inflation concerns, which now stand at 3.3%. The changes will reduce costs by 7 cents initially, down to 4.5 cents later in May.

Austria's three ruling parties reached a crucial last-minute agreement on Thursday to extend a mechanism introduced last month aimed at cushioning consumers from rising petrol prices, thus preventing a potential political deadlock. Public concern over inflation remains high, with figures showing a rise to 3.3% in April compared to January's 2%.

The mechanism involves reducing retailers' margins and returning increased VAT from higher fuel prices back to consumers via reduced petrol tax. Initially set at a 10 cent reduction per litre, the reduction had been due to expire on Friday, necessitating Thursday's timely agreement for its seamless extension.

Under the new agreement, the petrol tax reduction will drop to 2 cents per litre starting May 1, while the margin reduction will remain at 5 cents initially before reducing to 2.5 cents mid-month, resulting in a combined total reduction of 7 cents initially, decreasing to 4.5 cents later in May. Chancellor Christian Stocker's conservative People's Party, responsible for the economy ministry, has yet to comment on this deal.