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We model the rate of inflation and unemployment in Austria since the early1960s within the Phillips/Fisher framework. The change in labour force is thedriving force representing economic activity in the Phillips curve. ForAustria, this macroeconomic variable was first tested as a predictor ofinflation and unemployment in 2005 with the involved time series ended in 2003.Here we extend all series by nine new readings available since 2003 andre-estimate the previously estimated relationships between inflation,unemployment, and labour force. As before, a structural break is allowed inthese relationships, which is related to numerous changes in definitions in the1980s. The break year is estimated together with other model parameters by theBoundary Element Method with the LSQ fitting between observed and predictedintegral curves. The precision of inflation prediction, as described by theroot-mean-square (forecasting) error is by 20% to 70% better than thatestimated by AR(1) model. The estimates of model forecasting error areavailable for those time series where the change in labour force leads by one(the GDP deflator) or two (CPI) years. For the whole period between 1965 and2012 as well as for the intervals before and after the structural break (1986for all inflation models) separately, our model is superior to the na\"iveforecasting, which in turn, is not worse than any other forecasting model. Thelevel of statistical reliability and the predictive power of the link betweeninflation and labour force imply that the National Bank of Austria does notcontrol inflation and unemployment beyond revisions to definitions. The labourforce projection provided by Statistic Austria allows foreseeing inflation at aforty-year horizon: the rate of CPI inflation will hover around 1.3% and theGDP deflator will likely sink below zero between 2018 and 2034.

Inflation, unemployment, and labour force. Phillips curves and long-term projections for Austria