Hungary is performing worse in terms of inflation than the war-torn country of Ukraine. The economic crisis affects life so much in the country that it is almost impossible to save money anymore. Although Hungarians buy less and still have to spend more, this is true for the whole continent. Despite the terrible situation on the whole continent, Hungary still stands out with its 25 percent inflation rate.
According to the newest analysis of Nielsen IQ, Hungary had a 25 percent inflation rate in the third quarter of the year, reports Euronews. The data from Eurostat shows that food prices have risen by 45 percent in the past year. Other than countries with hyperinflation like Turkey or Kazakhstan, Hungary’s performance is the worst in Europe. Even in the war-torn country of Ukraine, the situation is still better, at least in terms of inflation.
Why is this the case?
There are many things contributing to soaring inflation. The most prominent reason is the weakening of the forint which lowers the competitiveness of the national currency. However, there is also the problem of price caps. As the government introduces new price caps, shops need to raise the prices of other products to cope with the losses. The government’s stipend worsened the situation too when they decided to inject about EUR 4 billion into the market. This led to a 50 percent increase in demand in the market further increasing prices in shops.
Customers became warier with their purchasing practices. They search for cheaper alternatives and they actively search for promotions and discounts. Some even choose to travel farther for better prices. From a survey, encompassing the whole of Europe, it turns out that people mostly save money on clothing and construction.
Less people eat out and they rather choose to cook at home. The demand for luxury products has also fallen drastically. For obvious reasons, the will to invest has also fallen and people rather hold on to their money in such uncertain times. Confidence indices show that more people think that this is not the time for purchases. Due to these factors, people generally start to feel that their financial or labour situation is not good anymore.
The only hope left for small and medium-sized retailers is the Christmas season. Fourtnately, most respondents said that the holiday is sacred and they are not willing to save money neither on proper food or gifts.