Inflation peaks in Hungary, easing to follow

The new inflation data will be released on Friday, 10 February in Hungary. What can we expect to see in the report? Are we in for a surprise again? One thing is for sure, according to the Hungarian economic news portal Világgazdaság: inflation has already peaked in the country. Price pressures in the economy may be easing, albeit slowly.

The rise in consumer prices in Hungary accelerated further in January, after the Central Statistical Office (KSH) recorded lower-than-expected inflation in December. The KSH will publish the latest data for January on Friday, Világgazdaság reports. According to the consensus of Világgazdaság analysts, inflation rose by 25 percent year-on-year in January and by 1.9 percent year-on-year in December. On average, experts expect an 18 percent increase this year.

At the end of the year, the KSH reported a 24.5 percent money depreciation. That was a surprise, given that the predicted inflation rate was 25.7 percent. The difference can presumably be attributed to the same statistical effect that is now causing the data to show another acceleration, the news portal writes.

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The effect of the abolition of the fuel price cap

The acceleration in inflation in December was almost entirely due to the removal of the fuel price cap. Since the phasing out happened mid-month, it will still have an impact on inflation in January, Gábor Regős, head of the Makronóm Institute, told Világgazdaság.

According to Péter Virovácz, analyst at ING Bank, the inflation rate could jump again in January, to 25.5 percent, after another 1 percentage point increase. According to him, food inflation may have continued to strengthen, now well above 45 percent on an annual basis. “Overall, I expect three areas to show stronger upward momentum: food, fuels and services,” said the ING Bank expert.

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Gergely Suppan, senior analyst at Magyar Bankholding, also believes that the pass-through effect of the phasing out of the fuel price cap was the main factor pushing inflation higher.

ALDI already started lowering their prices

“Of course, one swallow doesn’t make a summer, but the announcement by a discount chain that it is cutting the price of imported butter by 20 percent and domestically produced butter by 10 percent may be a sign that something is happening,” said Virovácz about ALDI’s price cuts.