Early 2025 set to bring sharp price hikes in Hungary: Is your wallet ready?

Hungary may face substantial price hikes in early 2025, according to the latest inflation report from the Hungarian National Bank (MNB). Companies, grappling with rising costs, are anticipated to implement noticeable price adjustments in January, following months of suppressed consumer price growth.

Companies absorb costs, but for how long?

In recent months, firms have managed to offset climbing expenses by reducing profits rather than hiking prices. According to HVG, import prices have been steadily increasing since May 2024, and industrial production costs have been rising since mid-2023. Yet, consumer prices in sectors like durable goods even dropped slightly—down 0.6% from July to November 2024. This apparent resilience is largely due to intense market competition. Companies in highly competitive industries have prioritised retaining customers over maximising profit margins, keeping price growth minimal. For instance, profits in pasta and preserved flour products surged by 265% and 107%, respectively, between 2022 and 2023. Since May 2024, however, prices in these categories fell by 4.1% and 4.5%. Similarly, telecom companies reduced service fees by 7% in autumn 2024, following a 105% profit boost over two years.

Early 2025: A turning point?

Despite these efforts, the MNB warns that the current trend may not endure. Businesses in the retail and service sectors have revised their price expectations upwards, signalling a shift from the moderate outlook of early 2024. Analysts fear that prolonged cost increases in imports and production could eventually trickle down to consumers. The inflation outlook for 2025 remains uncertain, with forecasts ranging from an optimistic annual average of 3.3% to a pessimistic 4.1%. Experts agree that inflation will likely peak in the year’s first few months before stabilising later. The degree of January price hikes by companies will play a pivotal role in determining whether the current slowdown in profit-driven inflation becomes permanent.

Price hikes: Why monitoring prices matters

The MNB urges consumers to closely monitor early 2025 price changes, as these will offer critical insights into the trajectory of Hungary’s inflationary trends. While recent price drops in some sectors have provided relief, sustained cost increases could soon create a ripple effect across the economy. The stakes are high as the nation braces for the economic challenges of the new year, with household budgets likely to feel the pressure.

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