According to the latest forecast of the Hungarian National Bank (MNB), the end of the food and petrol price freeze in May will bring a surge in inflation. These price increases are expected in the forthcoming months.
According to analysts at the Hungarian National Bank Bank (MNB), the pace of price increases could break decades of records in the upcoming months. This is based on the assumption that the food and petrol price freeze, currently in effect until the beginning and mid-May, will bring a surge in inflation after the parliamentary elections.
The central bank believes that after 8.3% in February, inflation will remain above 8% in the first half of the year. However, there is an even worst-case scenario, according to which, the price index could even rise above 10%.
Inflation is expected to peak in July: in the worst-case scenario, it could exceed 11% by mid-summer.
This means that decades of records could be broken in the coming months – reported by Népszava.
According to András Balatoni, Director of MNB, the latest inflation forecast is based on the fact said that the rate of money depreciation will accelerate in the short term, and only towards the end of 2022 will the indicator start to decline significantly. According to the report, much depends on the outcome of the Russia-Ukraine war. If the fights end quickly, commodity prices could fall on world markets, easing price pressures. If the fighting drags on, this may not happen or may only happen later, which is why the MNB’s inflation forecast is wide-ranging.
Presumably, the increases will be felt mainly in non-processed food and fuel.
While the rise in fuel prices will be dampened in the short term by the 480 forint price cap extended until 15 May, market developments will certainly take effect later. In addition, the market for unprocessed food will start to deteriorate. Analysts say this is due to soaring wheat and maize prices as a result of the Russia-Ukraine war, as well as rising energy and raw material prices.
Cereals are more than 52%, vegetable oils 117%, while sugar is “only” 16% more expensive. As the Hungarian news portal Blikk reports, the price freeze affects many of these products, so if there will be no extension after 1 May, the price of cooking oils could double in May as the price freeze is lifted. In addition, the price of dairy and meat products could also rise dramatically.
Source: nepszava.hu; blikk.hu