Inflation peak unseen since 1996 is expected to hit Hungary

The peak of inflation is expected to be around 19-22 percent, but it is possible that it will even exceed 22 percent. Several factors can influence the timing of the highest inflation, but the rise can already start in September.

According to Barnabás Virág, the Vice President of the Central Bank, a big jump in inflation in September is expected, which can be close to 20 percent. By now, the cycle of interest rate hikes had ended after the base interest rate was raised to 13 percent.

The latest inflation report was published by HVG. This forecast was made by the Magyar Nemzeti Bank (Hungarian National Bank) about the expected annual average inflation.

• 2022: 13.5-14.5 percent (according to the forecast made in June: 11-12.6 percent),
• 2023: 11.5-14 percent (according to the forecast made in June: 6.8-9.2 percent),
• 2024: 2.5-4 percent (according to the forecast made in June: 2.5-3.5 percent).

As the figures show, the forecasts are getting more and more pessimistic. The peak inflation can reach 22 percent, which is the highest it has ever been since 1996.

Many factors play a role in shaping the trajectory of inflation. Most experts agree that the time when the price increase will reach its peak primarily depends on the end of price caps. Even though the Minister of Economic Development had already said that it would be best to gradually abolish price restrictions, the government extended the food price caps until the end of 2022. There is already a big spike in September due to the utility increase and the drought.

Inflation and economic growth

The economic growth forecasts are also getting more and more negative. Experts only hope for a 3-4 percent growth, compared to the predictions in June, which showed 4.5-5.5 percent. The economy is already slowing down and there will be a significant setback in the next quarters, reported Hír24.

Source: HVG, Hír24