Hungarian government has to raise inflation expectations: what was to be avoided is now the best case scenario

The National Bank of Hungary (NBH) raised its inflation forecast in a quarterly report published in full on Thursday.

The central bank raised its forecast for average annual inflation in 2025 to 4.5pc-5.1pc from 3.3pc-4.1pc in the previous Inflation Report released in December. András Balatoni, an NBH director, said inflation had peaked in February and would fall back to the central bank’s 3.0pc +/-1pp tolerance band at the beginning of 2026.

He noted that rising inflation since September had reflected a global trend and pointed to the repricing of manufactured goods, food and services early in the year that was over the historical average. He added that strong price dynamics of market services could lift inflation for the full year. He said both consumer and businesses’ inflation expectations had increased.

A cap on markups of some basic foods recently rolled out by the government could shave 0.8pp off headline inflation in April and May and bring food prices under 4pc, temporarily, he said. The NBH puts 2025 GDP growth at 1.9pc-2.9pc in the fresh report.