NBH director: Inflation to peak in autumn

Inflation is expected to peak in autumn 2022, then gradually subside until it reaches the central bank’s tolerance band at the end of 2023, and the NBH target of 3 percent by 2024 H1, the director of the National Bank of Hungary (NBH) told a press conference on Thursday, presenting the quarterly Inflation Report.

Gergely Baksay noted that the NBH has raised its inflation forecast to 11.0-12.6 percent for 2022, from 7.5-9.8 percent in the March report.

Inflation is growing, and the growth accelerating, in all of Europe, hitting a wide range of products, he said. Hungarian inflation is the lowest in the region, thanks to price caps introduced on basic goods, which stop energy price hikes from raising customer prices, he said.

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The government measures are expected to moderate inflation by 4.3 percentage points in 2022 and 0.7 of a percentage point in 2023, Baksay said, noting that the estimate was based on the technical assumption that the price caps would be phased out gradually from October 1, 2022 until June 30, 2023.

Monthly price increases have accelerated significantly, to 3-4 times their level in previous years, he said. Food prices could increase by more than 20 percent in the coming months, he added. Raw material and energy costs are close to peaking so these are not expected to rise significantly further, he said. Producer prices are still rising so these are still passing through into consumer prices.