Consumer price inflation in Austria slowed to 2.7% in July, down from 3.2% in June, according to a flash estimate from Statistik Austria.
The decline marks a continued easing of the price pressures that surged following the escalation of the Iran conflict earlier in the year.
While the headline rate is receding, the underlying drivers are shifting from geopolitical supply shocks to domestic weather-related constraints.
The moderation in the overall inflation rate reflects the fading risk premium on energy markets, a trend that has stabilized oil prices near pre-conflict levels in recent weeks.
However, the latest data points to a new headwind: extreme heat and drought conditions across Central Europe are beginning to impact agricultural output.
Analysts warn that these weather events are likely to drive up food prices in the coming months, potentially offsetting some of the gains made in the energy sector.