Positive prospects: Price of petrol could drop as low as HUF 500, Hungarian central bank says

According to the latest inflation report from the Hungarian National Bank (Magyar Nemzeti Bank, MNB), which aligns with analyst forecasts, lower oil prices are expected next year. As a result, petrol prices could temporarily approach the psychological threshold of HUF 500 (EUR 1.25) per litre. However, a less optimistic forecast is that natural gas prices are expected to rise.

The MNB’s quarterly inflation reports serve as a useful guide for energy prices and anticipated inflation trends, Mfor reports. The good news is that the central bank believes the alarming inflation rate, which had been nearly 20% annually, is behind us. In fact, consumer price growth could be even lower next year compared to this year’s more moderate figures. Current projections estimate inflation to be between 3.5% and 3.9% in 2024, 2.7% to 3.6% in 2025, and 2.5% to 3.5% in 2026 on an annual basis.

Petrol prices could fall

A positive outlook on the price of petrol in Hungary. Photo: Alpár Kató/Daily News Hungary

The MNB’s analysis suggests that their earlier assumptions about world oil prices, expressed in dollars, have been adjusted downward from their June estimates. The Brent crude price fluctuated around USD 80 per barrel in August, but by early September, it dropped to around USD 70. The increased volatility in global oil prices over the past few months has introduced uncertainty into the bank’s fuel price forecasts.

If the decline in oil prices continues next year, it will likely be reflected in the prices of refined products, including fuel. However, the key question is whether tax regulations will change, as adjustments to these rules could complicate price expectations, particularly given the current budgetary issues, Mfor writes. The exchange rate of the forint also has an impact on petrol prices. If neither of these factors leads to significant price increases, a Brent price falling below USD 65 could see petrol prices approaching the psychologically important HUF 500 per litre mark at domestic stations.

Natural gas prices expected to rise

Illustration. Photo: Facebook/Energiaügyi Minisztérium

On the other hand, the report warns of rising natural gas prices due to the ongoing Russia-Ukraine war. The current world market price is around EUR 30 to 40 per megawatt-hour, with an average price of EUR 33.4 expected this year. However, according to the MNB’s evaluation, this price could increase by more than EUR 5 next year. Although this price change won’t significantly affect inflation, there could be substantial price hikes if the government imposes new taxes on gas. While this scenario is possible, it is not certain, Mfor reports.

MNB deputy governor addresses Silk Road Fund conference in Beijing

MNB Deputy-Governor Csaba Kandrács addressed an international conference in Beijing organised to mark the tenth anniversary of the establishment of the Silk Road Fund on 29 September, the central bank said on Wednesday.

Kandrács pointed to the need for a balanced global financial network that could support sustainability in his remarks. He said the NBH was “at the forefront” in terms of green finance, being the first bank in Europe to get a green mandate while launching a number of green programmes and supporting cooperation among international green initiatives.

Kandrács and his delegation from the NBH held talks with Xuan Changneng, the deputy governor in charge of international relations at China’s central bank, on the sidelines of the conference.

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