Painful tax increases coming in Hungary: petrol, cigarettes and more to cost extra

From this January, Hungarians will face notable tax increases: excise duties on petrol, tobacco products and alcohol are set to rise—more steeply than previously expected. The cause is not global oil prices or a new round of government austerity, but rather an unseasonably cold May combined with a peculiar method of calculation.

The story began last autumn, when the government decided to implement inflation-linked tax increases. Under the new rule, a number of levies—including excise duties, company car taxes, vehicle taxes and certain fees—will automatically increase each 1 January in line with the inflation rate measured in the previous year. The intention was to remove the need for annual legislation.

The twist lies in how the rate of tax increases is determined: it is not based on annual or year-end average inflation, but solely on data from the preceding July, according to HVG. This method carries a clear risk—if inflation spikes in July for any reason, it automatically triggers higher tax increases.

July inflation surge leads to steeper taxes

That is precisely what happened this year. According to fresh figures from the Central Statistical Office (KSH), inflation in July 2025 stood at 4.3%—higher than anticipated. The main factor, according to official statistics, was a reported “23% price rise” in piped natural gas, despite the fact that gas prices themselves had not actually changed. This anomaly resulted from adjustments to the utility price regulation system and the statistical methodology applied.

Alongside regulated pricing, there is also a consumption threshold: households exceeding it must pay seven times the base rate. Each month, the KSH estimates how much gas is consumed at the subsidised rate versus at the market rate. However, because actual consumption data for July was unavailable, the office relied on a 12-month moving average, with May as the most recent data point.