Here’s a positive surprise: inflation in Hungary is on the right track

Hungary’s annualised consumer price index fell to 4.7pc in March from 5.6pc in the previous month, data released by the Central Statistics Office (KSH) on Tuesday show. Perhaps already noticeable, the margin freeze is holding back inflation.

Latest inflation data

Food prices rose 7.0 percent. The price of flour jumped 42.2 per cent, cooking oil prices climbed 32.7 percent, milk prices rose 16.7 percent, and poultry prices increased 7.6 percent, but noodle prices edged down 0.8 percent.

According to KSH, household energy prices fell 2.7pc as piped gas prices dropped 5.5pc. Consumer durable prices rose 2.1pc. Motor fuel prices declined 2.5pc. Prices of spirits and tobacco products increased 5.5pc and clothing prices rose 2.3pc. Service prices increased 7.5pc. Harmonised CPI, adjusted for better comparison with other European Union member states, was 4.8pc.

Core inflation, which excludes volatile fuel and food prices, was 5.7pc. The CPI calculated with a basket of goods and services used by pensioners was 4.7pc.

In a month-on-month comparison, consumer prices were flat. Food prices were unchanged and household energy prices inched down 0.2pc, but clothing prices rose 1.2pc and service prices increased 0.3pc.

The margin freeze holds back inflation

According to analysts at Világgazdaság, food inflation has stagnated monthly. The impact of the margin freeze, which will come into effect on 17 March, may be included in the current result, but it is too early to see exactly to what extent.

Prime Minister Viktor Orbán announced a 10% margin cap on 30 basic food items a month ago. Although the KSH data collection lasts until the 20th of each month, so this will not be reflected in inflation in March but in April, it could reduce inflation by up to 0.8% overall. Analysts say the margin freeze has played a massive role in the government’s ability to contain food inflation. Márton Nagy, Minister of National Economy, said at a background briefing on 11 March, when the price freeze was announced, that food inflation in March was averaging between 9 and 10 percent, compared to the 7 percent increase in March. In April, it is not excluded that it will creep below 5 percent.

As we wrote yesterday, U.S. tariffs on Hungary cite corruption concerns, straining ties despite Orbán-Trump alliance – details HERE

UPDATE – Ministry comments on inflation results

In a comment on the fresh data, the National Economy Ministry pointed to the impact of a government-mandated cap on markups that had reduced prices of a broad range of food products at big supermarket chains by 18.8pc on average. The price of lard has fallen by 31.2pc, the price of plain yoghurt by 28.5pc and the price of flour by 21.4pc. Prices of lactose-free dairy products, such as plain yoghurt, trappist cheese and milk have fallen by 25pc or more.

The government continues to combat service price inflation and expects banking and telecommunications sector players to voluntarily cap prices after negotiations, the ministry said.

April CPI could fall to around 4pc, while food price inflation drops under 5pc, it added.