Eurostat investigates: inflation in Hungary calculated fraudulently?
Eurostat is in talks with the Hungarian Central Statistical Office (KSH) on the method of calculating energy inflation, the European Union’s statistical office has told Reuters. There are growing doubts about the reliability of Hungarian statistics.
According to Portfolio’s review, Eurostat wrote that it “regularly checks compliance with methodological guidelines by EU member states.” They added that negotiations with Hungary on the calculation of energy inflation began in the autumn and “it is not yet known when they will be concluded”.
Political pressure to publish better inflation data?
In recent months, there have been several press reports that the data from the Hungarian Central Statistical Office (KSH) may be particularly good at the suggestion of higher-ups. In particular, there were concerns among some analysts about the revision of the second quarter GDP data and inflation falling below 10 percent in October, Portfolio reports. Asked by Reuters whether Hungarian inflation data could be revised as a result of the negotiations, Eurostat said that this was a possibility, but very rare.
Népszava recently reported that several economists doubted that inflation would really have fallen below 10% in October. According to experts interviewed by the news portal, if the KSH had calculated the change in energy prices based on the methodology used in previous years, inflation in October would have been somewhere between 11-12%.
Foreign market participants notice Hungarian data
In a statement on Wednesday, the statistical office strongly rejected the accusations. It stressed that its calculations on inflation data were “fully in line with European statistical guidelines”. However, the KSH’s methodology for calculating energy inflation has already caught the eye of foreign market participants, according to Portfolio.
In his Thursday morning commentary, Commerzbank’s Tatha Ghose specifically discusses the uncertainty surrounding the Hungarian data. The most serious concern, he said, is that the government is interfering in the work of the KSH from above, i.e. that more favourable data are being published under political pressure. However, it is difficult for an outside observer to judge how much of this is true.
According to Ghose, there are some countries where the reliability of GDP and inflation data is seriously questioned, such as Turkey and Russia. “These are typically countries that are not recommended for investment by credit rating agencies, which is telling in itself,” the analyst said.
In the case of Hungary, these concerns are not widespread for the time being, as the KSH has to comply with European standards and Eurostat is constantly reviewing the reliability of Hungarian data.
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KSH rejects reports of Eurostat investigation
Contrary to media reports, the EU’s statistical office, Eurostat, has not launched an investigation against Hungary’s Central Statistical Office (KSH), KSH said in a statement on Friday. Eurostat has been in constant dialogue with the corresponding offices of all member states on issues of methodology, KSH said, responding to a Reuters report. “KSH’s methodology is in line with the European Commission’s relevant regulations,” it said. “KSH calls on journalists to always fact-check politically motivated statements before publishing them,” the statement said.
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