The reasons IMO are: * less price sensitivity: German people are extremely price sensitive, they discuss and compare prices all the time. In Austria people care way less about this on average. Supermarkets take advantage * higher logistics costs: population density in Austria is less than in Germany. Furthermore, many supermarkets are located in areas hard to reach like mountain areas. Higher logistic costs translate to higher prices * VAT is slightly higher in Austria * unqualified labor that works in supermarkets and logistics makes slightly more money in Austria than in Germany * there indeed is a higher supermarket tensity in Austria than in Germany. Supermarkets of the same company appear more appealing in Austria than in Germany: nicer presentation of food, cleaner, way less people in the line waiting. All this makes them more expensive
For all these reasons mentioned above prices are higher. I argue it's mostly related to consumer choices. If they would care so much about prices and so little about esthetics as in Germany then prices would come down. If people would start to walk the extra mile for the cheaper supermarket prices would come down.