The skyrocketing price rise of unprocessed foodstuffs will increase the price of processed foods in the coming months, István Madár, a leading analyst of Portfolio, a Hungarian economic website, said in the Portfolio Checklist podcast. He also talked about the soaring inflation Hungarians have been struggling with for months.
Mr. Madár said that it was presumably true that Hungary had the highest inflation in the European Union. That is true even for unprocessed foodstuffs where the price increase reached 40.4 percent. Among the member states of the European Union, there were only two countries where the inflation in that segment surpassed 30 percent. In all other countries, it was below that threshold, while the EU average was only 16 percent.
He added that the price rise of unprocessed foodstuffs would sooner or later appear in the prices of processed foods. In the latter segment, inflation in Hungary is not outstanding in the EU. However, even the National Bank of Hungary expects a significant price rise in Hungary’s food sector in the next few months, Telex.hu wrote.
The analyst said October inflation statistics would be revealed next week, but the September data of the Eurostat are appropriate to deduce the trends. Those data show that only the three Baltic states preceded Hungary regarding inflation in the European Union. Furthermore, inflation exceeds 20 percent only in Estonia, Latvia, Lithuania and Hungary. However, it is a considerable difference in that the Baltic states subsidise fuel prices and household energy prices less than the Hungarian government.
On the question of why Hungary faces such hardships, the analyst mentioned two main reasons.
First, the Hungarian national currency lost a lot of its value and that increased import goods prices. Secondly, at the beginning of 2022, the government distributed a lot of money. That was important to win the elections and included extra money for pensioners, families raising children, soldiers, etc. That support and the increased minimum wage generated extra demand and raised the prices of everything since the purchasing power of the households significantly grew temporarily.
Meanwhile, the Food and Agriculture Organization of the United Nations said that the consumer food price index fell in October following a trend that lasted seven months. The food price index stands 14.9 percent below this March’s historic peak, haszon.hu said.
Source: telex.hu, haszon.hu