In July, compared to the previous year’s data, the rate of inflation reached 13 percent. To add fuel to the fire, the July calculations do not yet include the increase in overhead costs. Hungary is already suffering from high prices but the real inflation is just about to begin.
The inflation in Hungary may have jumped to 13 percent in July, according to Portfolio‘s survey. In June, the KSH measured an annual rate of price increase of 11.7 percent. This means that a further significant acceleration in the rate of currency deterioration is expected.
What factors might cause inflation?
Although we cannot see the effect of the increase in overhead prices yet, there are other factors that can trigger inflation.
The factors are the following:
- the weakening of the forint
- the second-round effect of special taxes, integrated into prices
- the chip tax (NETA) and the excise duty increase
- war-inflicted supply shortages and rising prices of raw materials in production
- food price shock
- strong household demand
- the continuous inclusion of market energy prices which affect other products and services
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Inflation may peak at 16-17 percent in autumn
Experts believe that the price rise Hungarians experience in July is just the tip of the iceberg. The inflation may peak at 16-17 percent in autumn, and will likely not abate much by the end of the year. The forecast regarding the end of 2022 clearly shows how quickly the price increase accelerated. In January, the projected inflation for December was 3.4 percent, which surged to 8.6 percent in April and then reached 16.5% in the next four months.
Here are the record price rises
According to Mérce, margarine holds the highest price increase record with 41.4 percent. However, the price of bread follows it closely at 37.5 percent. Moreover, the price of cheese also rose by 35.4 percent, poultry meat by 34.3, dry pasta by 33.3, and dairy products by 30.3 percent.
If the weakening of the forint or the rising prices of raw materials were not enough, there is a huge drought as well this summer. Due to the climate change-triggered drought, the grain yield was also extremely low in Hungary. According to the calculations of the National Association of Agricultural Cooperatives and Producers, due to the drought, the price of edible wheat may increase by up to 30-40 percent.
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Source: portfolio.hu, merce.hu
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