20 percent inflation on the way in Hungary

Inflation is soaring in Hungary. But when will it stop? The rate in August was 15.6 percent, but a lot has happened since then. September’s report is on the way and everybody is wondering whether inflation reached 20 percent.

Forbes.hu reported that most predictions point out that inflation will be around 20 percent. The question is rather about it being more or less than this value. Technically speaking, it does not make a difference, but it is an important landmark down the inflation spiral. The question is not whether this rate will be reached or not, but rather when?

Reasons behind the increase

The inflation rate is already high. In August, according to the last report, it was 15.6 percent, but things changed since then. In September, utility costs will also be added, which could mean a huge price hike. Therefore, the increased utility costs contribute a lot to inflation as well.

Portfolio.hu asked analysts about their predictions about September’s inflation rate. Of the eight analysts they asked, four predicted that inflation will surge above 20 percent. But even those who were more optimistic still said a rate only slightly lower than that.

The more important contributing factors are increased energy prices, the volatile currency, the capital’s new parking regulation, the increased price of internet and phone services. Finally, the increased food prices also had an effect.

• Read also: Would the euro instead of the forint save the Hungarian economy?

How far it will go?

The price limitations issued by the government have an effect on inflation rates. The expected date of abolition is also a question, but until the end of the year, the caps will certainly remain. The analysts are divided on the issue. Some say the price-stop will remain until 2024. Others predict that a slow phase-out will be present to minimise the shock effects.

Such a surge in inflation, however, is not probable. According to analysts, inflation will not go far above 20 percent. But this does not mean that the prices will not increase. Inflation is a statistical term and it only compares previous rates to current ones. This means that if the base rates are already high, the further increase would need to be increasingly high as well. So the price hikes will remain, but in comparison, the growth rate will be much lower.

However, we will feel the effects of the current recession for a long time. Most analysts predict that even in 2023, the average inflation rate will still be between 10-15 percent.

Read alsoLife becoming very expensive in Hungary, Hungarians pessimistic

Source: Portfolio.hu, Forbes.hu