The Organisation for Economic Co-operation and Development (OECD) has acknowledged the qualified status of Hungarian rules on the global minimum tax, the National Economy Ministry said in a statement on Saturday.
On January 15, the OECD issued a record of jurisdictions whose minimum tax legislation has completed the agreed process and secured transitional qualified status. Hungary was included on both the list for qualified income inclusion rules and qualified domestic minimum top-up tax rules, the ministry said.
Hungarian legislation on the 15pc minimum global tax has been in force since December 31, 2023. Hungary’s tax system remains among the most competitive in Europe, the ministry said.
Read also:
Hungarian Parliament votes on tax changes, global minimum tax and other important changes
The National Economy Ministry said the Ukrainian threat to crude supply along with U.S. sanctions was lifting vehicle fuel prices in a statement issued on Saturday.
The ministry pointed to the impact of U.S. sanctions targeting a “shadow fleet” exporting Russian crude as well restrictions on Serbian oil company NIS. It also noted the shutdown of the Druzhba pipeline at the start of January as a result of the Russia-Ukraine war.
The ministry stressed that the government would do everything in its power in the interest of families and businesses to ensure security of supply as well as stable vehicle fuel prices. The government aim remains to guarantee that prices at the pump in Hungary remain under the average in neighbouring countries, it added.
The average price of petrol in neighbouring countries stood at the equivalent of HUF 637/litre during the reference period, HUF 1 over the price in Hungary, while the price of diesel averaged HUF 654/litre, HUF 1 under the price at the pump in Hungary, the ministry said.
The data show prices at the pump in Hungary are in line with the average price in neighbouring countries, it added. The government is prepared to intervene if prices in Hungary exceed the average in neighbouring countries, the ministry said.
Read also:
Skyrocketing fuel prices in Hungary: Among the most expensive in the region – read more HERE
Swiss rolling stock maker Stadler inaugurated a capacity expansion at its base in Szolnok (E Hungary) on Friday.
Minister of Foreign Affairs and Trade Péter Szijjártó said the investment would boost capacity at the base by 20pc and add double-decker aluminium carbodies to the production palette. Stadler has invested around HUF 80bn in Hungary and produced 5,600 carbodies, he added.
Carbodies from Szolnok are in service in 14 countries, including the United States, Spain, the Netherlands and Germany. Stadler employs close to 1,000 people in Hungary. Around 900 Swiss-owned companies in Hungary employ over 30,000 people.
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Budapest mayor: busiest metro line may undergo major upgrade – read more HERE
The government wants to make Hungary a place that can attract investments from anywhere, Zoltán Kovacs, the government’s international spokesman, said in an interview with Eurasia Magazine.
“Hungary remains committed to openness. We continue to welcome investments from all parts of the world, whether in production, innovation, or development,” Kovács said. “These benefit not only our nation but also contribute to Europe’s overall competitiveness and economic growth,” he added.
He said Europe’s competitiveness hinged on acknowledging the diversity among Europe’s regions, unique differences that “cannot be standardised”. Regions need to be allowed to make the most of their own distinct capabilities, he added.
“Common sense” rather than “ideology”
Decisions that are “forced” on affected businesses, such as punitive tariffs on Chinese EVs, can do no good for European competitiveness, he said. He added that isolationist policies would lead nowhere. Kovács called for “common sense”, rather than “ideology”, when taking decisions on matters such as the green transition.
Asked whether he thought the Trump presidency would respect Hungary’s considerations with regard to China, Kovács said “ideologically-based pressure” was not expected, making things much easier from the start. He said the approach to the Trump White House would be founded on mutual respect, “something that is entirely lacking in Western European politics”.
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Guest worker situation after regulations change in Hungary: What companies can expect – read more HERE
Ukraine’s proposed ban on Russian oil transit raises concerns for Hungary and Slovakia
Boosting the Hungarian-Kyrgyz strategic partnership is an important mutual goal, and the Hungarian government is injecting another 34 million dollars into the joint development fund to support Hungarian companies entering the Kyrgyz market, the minister of foreign affairs and trade said after talks with Kyrgyz Deputy Prime Minister Bakyt Torobayev in Budapest on Friday.
Kyrgyzstan-Hungary relationships strengthening
Péter Szijjártó told a press conference after the talks that the importance of Central Asia had risen in the wake of recent changes in world politics and the global economy.
Hungary started cooperation in the region a decade ago, and has greatly profited from the close cooperation with members of the Organisation of Turkic States, he said. “The economic cooperation, growth of Hungarian exports and new energy resources in the Hungarian energy palette show that it is in Hungary’s interest to cooperate closely with the region’s states.”
Bilateral economic cooperation is also hitting record after record, with bilateral trade reaching new heights in 2023, and more than doubling again in the first 10 months of 2024, he said.
The Hungarian-Kyrgyz development fund has been set up with a 16 million dollar capital and has already supported the market entry of 4 Hungarian companies, he said. The new funding is designed to support agricultural, food production and water management companies, he said.
Hungarian companies participate in the development of Kyrgyzstan
“Hungarian companies will use the money to set up processing plants, animal farms and water power plants, contributing to the development of the sectors in Kyrgyzstan, as well as the Hungarian economy,” he said.
In higher education cooperation, Hungary is offering government scholarships to 200 Kyrgyz students wishing to study in Hungary every year, he added.
Hungary is also committed to supporting cooperation between Kyrgyzstan and the European Union, and has made efforts to promote that during its EU presidency last year, he said. “We were the first to submit to parliament the ratification of the Kyrgyz-EU cooperation and partnership agreement, and many companies are working to become the primary exporters of Kyrgyz agricultural products,” Szijjártó said.
A video of the press briefing:
Agriculture minister meets with Kyrgyz counterpart in Budapest
Agriculture Minister István Nagy met with Bakyt Torobayev, Kyrgyzstan’s minister for water management, agriculture amd processing industry, in Budapest on Friday. Nagy said Kyrgyzstan could be an important market for Hungarian seeds and breeding livestock in a statement issued by his ministry. He added that the Hungarian-Kyrgyz Development Fund could play a key role in developments involving Hungarian know-how and technology. The third Hungarian-Kyrgyz Agricultural Forum, to be be held in Budapest, could further strengthen business ties in the farm sector, the ministry said.
Read also:
Hungary to take part in the modernisation of Kyrgyzstan – read more HERE
Budapest’s 6th district, Terézváros, has long been a coveted destination for both Hungarian and foreign investors, as well as homebuyers. Its central location places it within walking distance of many of the Hungarian capital’s iconic landmarks. With a reputation for clean and relatively safe public spaces, the district has remained a prime choice for those seeking property. However, a recent referendum banning short-term rentals, including Airbnb, has begun to reshape the local real estate market, leading to a notable decrease in real estate prices.
Real estate prices start to decline following Airbnb ban
Last autumn, Budapest’s 6th district, Terézváros, held a landmark referendum, posing a question to residents: should short-term rentals be banned or allowed to continue? The liberal mayor, Tamás Soproni, argued that Airbnb had placed an unsustainable burden on the community. He stated that investors had bought up nearly all available properties, converting them into short-term rental units. This trend, Soproni noted, led to a sharp rise in real estate prices, making it increasingly difficult for families to settle in the district. Furthermore, he suggested that the proliferation of short-term rentals had significantly contributed to the district’s declining population.
Despite a modest turnout of 20.5%, the referendum ultimately resulted in a ban on all short-term rentals in Terézváros, effective from 1 January 2026. Early indicators suggest that this policy is already having an impact on the local property market and the real estate prices. According to figures from ingatlan.com cited by 24.hu, the average price per square metre for apartments under 50 square metres decreased by 5% last autumn, settling at HUF 1.037 million (approximately €2,507).
The number of available apartments is on the rise
The number of available apartments in this category has also risen dramatically, jumping from 130 to 200 within just three months—a significant 50% increase. This surge in supply is likely to provide more opportunities for buyers in the district, particularly those previously priced out of the market.
As of August, according to data shared by Mayor Soproni, there were 468 short-term rental units in Terézváros—representing 8% of all apartments in the district. Prior to the referendum, one in five Airbnb listings in Budapest was located in this neighbourhood. With the ban now in effect, this figure is expected to drop to nearly zero, presenting both opportunities and challenges for the district and the broader Hungarian tourism sector.
The Hungarian rental market has seen a dramatic surge, with December marking a turning point. National rents climbed 9.3% year-on-year, with Budapest seeing an even steeper rise of 9.6%. As wages struggle to keep pace, employers and employees alike are increasingly exploring new alternatives to battle the unfolding housing crisis.
Hungarian rental market faces major surge
As Pénzcentrumwrites, the Hungarian rental market experienced a significant surge at the end of last year, with average rents rising by 1.3% nationally and 1% in Budapest compared to November. December marked a shift after months of minimal declines, with rents climbing 9.3% higher year-on-year nationwide and 9.6% in the capital, according to the KSH-ingatlan.com rent index. As of January, only three districts in Budapest offered average rents below HUF 200,000 (EUR 486), while prices in the most sought-after areas ranged from HUF 235,000 (EUR 571) to HUF 322,000 (EUR 783).
László Balogh, chief economist at ingatlan.com, noted that rental prices will likely continue their moderate rise in early 2025, closely tied to wage increases in the labour market. These developments may further incentivise employers and employees to explore subsidised housing options.
What about the countryside?
In the Hungarian rental market, January data shows that average rents in Budapest remain below HUF 200,000 (EUR 486) in only three districts: 15, 21, and 23, with typical rents at HUF 180,000 (EUR 437). More diverse districts such as 8, 11, 13, and 14 see higher rents ranging from HUF 235,000 (EUR 571) to HUF 260,000 (EUR 632), while District 5 tops the list at HUF 340,000 (EUR 826). Outside Budapest, Debrecen leads among county seats with average rents of HUF 230,000 (EUR 559), followed by Győr at HUF 200,000 (EUR 486) and Nyíregyháza at HUF 180,000 (EUR 437). University cities like Szeged and Pécs average HUF 160,000, with Miskolc being more affordable at HUF 120,000 (EUR 292).
Wages can barely keep up, seeking alternatives
The rising costs in the Hungarian rental market are prompting both workers and employers to consider housing subsidies as a practical solution, according to László Balogh. Employers can easily administer the maximum monthly housing subsidy of HUF 150,000 (EUR 365) without needing contracts with banks or landlords, relying only on a rental contract or loan agreement provided by the employee. The subsidy can be transferred directly to the employee’s bank account alongside their salary. This option also benefits employers by reducing the tax and contribution burden by nearly 25%, making it a cost-effective alternative for both parties.
Hungary’s airspace experienced unprecedented traffic in 2024, with HungaroControl managing over 1.1 million aircraft throughout the year—an increase of nearly 6% compared to the previous year, the Hungarian air navigation service provider announced on Thursday via MTI.
Historic milestone for air traffic
According to the report, 2024 marked the highest air traffic levels in Hungary’s history, with a total of 1,144,000 aircraft crossing its airspace—an average of over 95,000 flights per month. This figure represents a 5.99% increase compared to 2023, itself a record year, and a 21.08% rise compared to pre-pandemic levels in 2019. During peak months—July and August—HungaroControl managed over 120,000 flights.
Overflight traffic dominates
Nearly 84% of the traffic consisted of aircraft simply passing through Hungarian airspace. HungaroControl guided nearly 960,000 such overflights in 2024, reflecting an over 5% rise compared to the previous year and a 26.62% increase relative to 2019. Traffic at Budapest Liszt Ferenc International Airport also grew, both in terms of arrivals and departures. Additionally, HungaroControl managed nearly 60,000 small aircraft flights from regional and smaller airports.
Preparing for increasing demand
HungaroControl stated that it is expanding its capacity to ensure safe air travel amid steadily growing traffic volumes. In 2024, nine air traffic control trainees earned their certifications, 11 foreign controllers joined the company, and three Hungarian controllers returned after working abroad. Projections suggest that 2025 will also bring heavy air traffic. To manage this, HungaroControl plans several professional, human resource, and technological developments. These include ensuring the continuous presence of meteorological assistance in operations rooms, optimising the airspace’s logical structure for greater efficiency, and implementing strategic projects in collaboration with Budapest Airport.
Comments from HungaroControl CEO
Ferenc Turi, CEO of HungaroControl, emphasised in the statement that the company is taking significant steps to minimise delays and effectively manage both overflights and arrival/departure traffic.
About HungaroControl
HungaroControl Plc., employing over 700 staff members, is a state-owned enterprise providing air navigation services in Hungarian airspace and, under NATO’s request, in the upper airspace above Kosovo. The company’s activities include training air traffic personnel and engaging in air navigation research and development. Its sole shareholder is N7 Holding National Defence Industry Innovation Plc., with indirect ownership managed by Hungary’s Ministry of National Economy.
National Economy Minister Márton Nagy said 2025 would be the year of families and SMEs at a press conference opening the new year in Budapest on Tuesday.
Nagy said households had felt the positive turnaround from September already and the trend would continue in 2025. He added that the ministry would closely track employment, wages, household consumption and borrowing, stability, and the situation in the home and car markets to ensure an uninterrupted advance.
In the case of SMEs, he said a pickup in lending would be key, adding that the endeavour would require the participation of the banking system and possibly assistance from the central bank. He pointed to the need to strengthen trust and cooperation between the state and the SME sector. Nagy acknowledged a slight increase in Hungary’s state debt, relative to GDP, in 2024, but said both state debt and the budget deficit were on the decline in 2025.
He estimated GDP growth reached 0.5pc-0.6pc in 2024, worse than expected, but a positive turn had taken place in the fourth quarter. He put this year’s GDP growth at 3.4pc. The labour market is stable and the number of inactive Hungarians is at a historic low, he said, adding that a minor increase in the jobless rate was no reason for concern. He projected real wage growth of 4-5pc in 2025 and said that increase would have a broad impact well beyond high earners. He noted that real wages had climbed for 82pc of full-time workers.
Nagy said household consumption could climb by 5pc in 2025, adding that retail borrowing would be “very strong”, boosted by unsubsidised loans, too. The number of new home constructions is set to climb, supported by government capital schemes, he said. Amid reduced demand, Nagy said it would pay off for SMEs to boost productivity, cut costs or digitalise.
Addressing the merger of the Finance Ministry with the National Economy Ministry, Nagy said the government would continue to exercise fiscal discipline. He said the relationship between the National Economy Ministry and the National Bank of Hungary (NBH) would be “completely different” after the new central bank governor took his post. The NBH’s approach is expected to change after Mihály Varga‘s arrival, he added.
The inflation rate in Hungary has clearly accelerated in recent months, from the 3% target set by the central bank in September to 3.7% in November and 4.4% in December, according to analysts’ expectations.
This increase is not entirely unexpected, as experts had already predicted that prices could accelerate by the end of 2024 due to the low base period in 2023 and the recessionary effects. The acceleration in inflation is partly due to technical factors, but the weak forint and international commodity price increases also play a significant role.
Drivers of inflation
According to Portfolio, inflation is being driven by several factors. One of the most important is the rapid increase in the prices of basic consumer goods, especially food. Food prices were lower in the second half of 2024, partly due to the recession and the fall in energy prices, but in December, the prices of dairy products, eggs and other staples resumed their significant rise. Global market developments, such as higher prices for chocolate and coffee, also contributed to the price increases.
The weakening of the forint exchange rate has a tremendous impact on inflation. A quarterly depreciation of 3.4% against the euro and 11.1% against the dollar increases the inflation rate by more than 1 percentage point, although the effect is gradual over several months. Therefore, inflation in December and price increases in the following months could be critical.
Inflation and government bond yields
Consumers are particularly sensitive to changes in the price of everyday consumer goods, which is one of the most visible effects of inflation. Food prices have risen faster than the average inflation rate, putting a greater burden on households. Analysts expect inflation to peak in January 2025, reaching as high as 4.7%, as a result of the weak forint and tax hikes earlier this year.
After the inflation peak, experts expect the money deflation rate to return to the central bank’s target range of 2-4% by the end of the year. The median forecast is for inflation to reach 3.8% by the end of 2024, while lower rates are projected for 2025 and 2026. Yields on inflation-linked government bonds are also affected by developments in the price index. The average inflation rate in 2024 is expected to be 3.7%, which is the basis for the yield premium on government bonds. If current forecasts are correct, the average inflation rate in 2025 could be around 4%, which is what investors can expect as a return.
The inflation situation in Hungary poses a significant challenge for households and economic agents alike, with technical factors, the weak forint and global economic developments also influencing price increases. Inflation is expected to peak at the beginning of the year and then gradually decline to the central bank’s target range. Inflation-linked government bonds could remain an attractive investment option in a changing economic environment.
The upcoming taxi strike in Budapest on 15 January will see drivers gather to push for fairer taxation, safer transport, and improved living standards. Led by the Taxis’ Interest Group, the demonstration highlights the urgent need for policy changes and constructive dialogue with the Ministry of National Economy to support small businesses and ensure the sustainability of the profession.
Fairer policies as safer transport
As 24.hu writes, on 15 January, the Taxis’ Interest Group is set to stage a demonstration, with reports suggesting it will take place at Heroes’ Square in Budapest. The taxi strike in Budapest aims to address pressing issues such as fair taxation, greener and safer transport, better job opportunities, and improved living standards for taxi drivers. According to the demonstrators, meaningful dialogue with the Ministry of National Economy is critical to achieving these goals, including access to subsidies and preferential loans for small businesses.
What do drivers want to achieve with the taxi strike in Budapest?
The organisation dealing with advocacy for taxi drivers is also calling for revisions to Hungary’s tax policies, emphasising the need to support small businesses. Despite submitting detailed proposals to various ministries and the Budapest Mayor’s Office, they claim their concerns have been largely ignored. Key demands include adjusting the tax exemption threshold to reflect the current economic climate, opposing inflationary taxes, limiting the number of taxis in the capital, and improving transport safety. The Taxis Drivers’ Interest Group hopes the demonstration will amplify their calls for a more equitable and sustainable future for the profession.
The Hungarian forint continues its downward spiral, hitting a two-year low against the dollar and showing no signs of stabilising. With experts predicting that the EUR/HUF exchange rate could weaken to 425 by spring 2025, the currency’s struggles could spell prolonged economic challenges for Hungary.
Nothing stops the forint from falling
As Forbes reports, on Monday, the Hungarian forint weakened further against the euro and reached a two-year low against the dollar, surpassing USD/HUF 406. This decline is likely driven by the dollar’s ongoing strength against the euro, which hit a new two-year high earlier in the day, a trend that often puts pressure on emerging market currencies. Looking ahead, Goldman Sachs predicts the dollar will strengthen by another 5% against the euro over the next year, fuelled by robust US economic growth and President Donald Trump’s tariff policies. This projection spells further challenges for emerging market currencies, including the forint.
2025 predictions
Forbes‘ expert predicted last year that economic challenges in Hungary are expected to persist, with predictions pointing to further weakening of the forint. Blochamps Capital forecasts that the EUR/HUF exchange rate could fall to 425 by spring 2025, driven by limited flexibility in interest rate management despite signs of economic recovery anticipated by autumn 2024. The central bank faces a tough task to stabilise the exchange rate in the next six months, as the forint’s weakness exacerbates inflationary pressures due to Hungary’s heavy reliance on imports. Slowing real wage growth and delayed recovery in consumption add to the economic strain, amplifying the social impact of currency depreciation.
China’s automotive company Xinzhi is creating almost 900 jobs by investing HUF 50bn in a new plant it is building in Hatvan, east of the capital, Minister of Foreign Affairs and Trade Péter Szijjártó said on Monday.
Szijjártó talks about strengthening Hungary’s position
Szijjártó said this investment further strengthens Hungary’s position in the global market for transitioning to EVs. He said Xinzhi is a market leader in the production of one of the most important basic units of electric motors. The minister said the company is also bringing serious research and development activities to Hungary, in addition to production, and will be hiring 30 highly trained engineers.
“The electric car industry is still in the early stages of its development, so R+D plays a really big role now,” the minister said noting that the R+D work of the company will be of particularly high added value.
Szijjártó said Europe’s economic competitiveness and security have deteriorated significantly in recent years, and the only way to stop this economic decline is if the continent strengthens its role in the electric automotive transition and does not hand over this opportunity to others. “Hungary is at the forefront of this process, it is a stronghold and leader in global automotive renewal,” he added.
Despite committing to adopt the euro upon joining the EU, Hungary continues to struggle with meeting the eurozone’s stringent criteria. With challenges ranging from budget deficits and public debt to inflation and rising interest rates, the euro in Hungary remains a distant dream, overshadowed by the enduring forint.
Struggling to meet eurozone criteria
As Pénzcentrum writes, Hungary committed to adopting the euro upon joining the European Union but has struggled to meet key eurozone entry criteria. The Institute of Economic Research recently assessed Hungary’s progress, highlighting mixed results. From 2004 to 2011, Hungary’s budget deficit consistently exceeded the 3% of GDP requirement, though fiscal discipline between 2012 and 2019 allowed compliance. However, the COVID-19 pandemic reversed this trend, with deficits exceeding the threshold until 2023, stabilising around 5% by 2024.
Public debt, another critical metric, remained far above the 60% of GDP guideline until 2012, despite a temporary improvement driven by pension fund nationalisation. While low interest rates aided a gradual decline in the debt ratio pre-pandemic, the crisis caused a sharp increase, leaving public debt levels stagnant since 2017. Meeting these benchmarks remains a significant challenge for the euro in Hungary.
Inflation makes matters worse
Inflation has also posed challenges to Hungary’s adoption of the euro. Before 2012, domestic price growth consistently exceeded the eurozone’s price stability criterion. Between 2014 and 2016, Hungary managed to align with the standard, aided by artificially suppressed utility costs. However, after 2016, while inflation remained close to the Hungarian National Bank’s 3% target, low euro area price growth made meeting the criterion difficult. Following a period of record-high inflation in Europe, which began to ease in 2022-2023, Hungary’s inflation stabilised near the reference value by late 2024, marking progress towards meeting this key requirement for introducing the euro in Hungary.
Euro in Hungary remains a distant dream
Hungary’s long-term interest rates have also fallen short of the Maastricht criteria for adopting the euro. While domestic rates consistently exceeded the allowed margin until 2012, the period between 2014 and 2020 saw compliance, thanks to favourable lending conditions. However, rising global and domestic rates since then have placed Hungary outside the threshold. By 2024, high interest rates and persistent budget deficits have moved the country further from euro adoption. Despite past opportunities, such as joining the ERM II in 2014, current economic policies suggest the forint will remain Hungary’s currency, delaying the potential benefits of the euro in Hungary.
A recent survey uncovers which Hungarian counties lead in happiness and which lag behind, revealing key factors such as financial security, age, and marital status that shape overall satisfaction.
About the survey
Pénzcentrum has conducted its yearly survey to find out which are the happiest and the least happy Hungarian counties. Based on responses from nearly 11,000 participants, the study highlights that factors like age, marital status, occupation, and financial stability significantly influence happiness. In addition, Hungarians felt slightly better in 2024 compared to the previous year. Happiness is crucial for societal and economic well-being, boosting productivity, creativity, and public health while attracting tourism and driving economic growth. As inflation slows, real wages rise, and labour market pressures ease, life in Hungary appears more manageable.
The happiest Hungarian counties
The average happiness score in Hungary has risen slightly to 5.8 from last year’s 5.7, with notable regional variations among Hungarian counties. Somogy and Vas counties lead the happiness rankings, while Nógrád consistently ranks last. Vas retained its top position, and Somogy made a remarkable leap from 19th to second place. Pest county also improved significantly, moving from 9th to 3rd, while Győr-Moson-Sopron and Zala counties slipped in the rankings.
Furthermore, gender and demographic differences reveal that women are generally happier than men, older individuals are happier than younger ones, and entrepreneurs report higher happiness than public sector workers, who scored the lowest with an average of 4.1. Married people and those with children reported greater happiness compared to single or childless respondents.
Healthcare and financial situation determine happiness
Hungary faces significant challenges in public health, ranking second to last among EU countries, with the healthcare crisis posing a critical threat due to doctor shortages, limited access to free medical care, and lengthy waiting times. Despite these issues, satisfaction with health has slightly improved, with Hungarian counties like Pest and Vas, as well as Budapest, reporting the highest satisfaction, while Nógrád remains the least satisfied.
Financial security emerges as a key determinant of happiness, as regions with higher average incomes, such as the capital, Pest, and Győr-Moson-Sopron, report the greatest financial contentment. Education and occupation also play a role, with individuals with higher education and professions such as employees, civil servants, and pensioners feeling more financially secure. However, despite rising wages and slowed inflation, overall financial satisfaction remains modest, with last year’s average score unchanged at 5.5.
Hungary may face substantial price hikes in early 2025, according to the latest inflation report from the Hungarian National Bank (MNB). Companies, grappling with rising costs, are anticipated to implement noticeable price adjustments in January, following months of suppressed consumer price growth.
Companies absorb costs, but for how long?
In recent months, firms have managed to offset climbing expenses by reducing profits rather than hiking prices. According to HVG, import prices have been steadily increasing since May 2024, and industrial production costs have been rising since mid-2023. Yet, consumer prices in sectors like durable goods even dropped slightly—down 0.6% from July to November 2024. This apparent resilience is largely due to intense market competition. Companies in highly competitive industries have prioritised retaining customers over maximising profit margins, keeping price growth minimal. For instance, profits in pasta and preserved flour products surged by 265% and 107%, respectively, between 2022 and 2023. Since May 2024, however, prices in these categories fell by 4.1% and 4.5%. Similarly, telecom companies reduced service fees by 7% in autumn 2024, following a 105% profit boost over two years.
Early 2025: A turning point?
Despite these efforts, the MNB warns that the current trend may not endure. Businesses in the retail and service sectors have revised their price expectations upwards, signalling a shift from the moderate outlook of early 2024. Analysts fear that prolonged cost increases in imports and production could eventually trickle down to consumers. The inflation outlook for 2025 remains uncertain, with forecasts ranging from an optimistic annual average of 3.3% to a pessimistic 4.1%. Experts agree that inflation will likely peak in the year’s first few months before stabilising later. The degree of January price hikes by companies will play a pivotal role in determining whether the current slowdown in profit-driven inflation becomes permanent.
Price hikes: Why monitoring prices matters
The MNB urges consumers to closely monitor early 2025 price changes, as these will offer critical insights into the trajectory of Hungary’s inflationary trends. While recent price drops in some sectors have provided relief, sustained cost increases could soon create a ripple effect across the economy. The stakes are high as the nation braces for the economic challenges of the new year, with household budgets likely to feel the pressure.
According to data from the National Employment Service (Nemzeti Foglalkoztatási Szolgálat, NFSZ), in December 2024, only 220,800 people were listed in the job seeker register, representing a decrease of more than 4,000 compared to the same period of the previous year. The number of job seekers also fell by more than 4,000 compared to the preceding month. This was highlighted in a statement issued on Wednesday by Sándor Czomba.
The State Secretary for Employment Policy at the Ministry of National Economy (Nemzetgazdasági Minisztérium, NGM) emphasised that the improvement of the Hungarian labour market is reinforced by the increased economic activity of the 15-64 age group and the growing willingness to work among retirees. These factors collectively contribute to more Hungarians joining the labour market, which has expanded by 1 million people since 2010. The December figure was the lowest for the month in more than three decades, Sándor Czomba said.
The government continues to prioritise supporting job seekers. The Youth Guarantee Plus (Ifjúsági garancia plusz) programme assists individuals under 30, while another EU-funded project provides support for job seekers over 30. Both initiatives aim to facilitate employment through wage subsidies, housing, and travel reimbursements. With the help of these programmes, around 27,000 job seekers have already found employment in the labour market, the State Secretary stressed.
The government is working to ensure families have higher incomes. As part of the 21-measure New Economic Policy Action Plan (Új gazdaságpolitikai akcióterv), a three-year wage agreement has been established, which will increase the minimum wage by 40% by 2027: this year by 9% to HUF 290,800 (EUR 700), in 2026 by 13% to HUF 328,600 (EUR 791), and in 2027 by 14% to HUF 374,600 (EUR 902). To support employers paying minimum wages, the government will allow them to “defer” the payment of the increased social contribution tax. In 2025, they will pay the 2024 rate; in 2026, the 2025 rate; and in 2027, the 2026 rate. The State Secretary reminded the public of this adjustment.
Recent data from Eurostat highlights stark disparities in household material welfare across Europe, with Hungary ranking at the bottom alongside Bulgaria. The study uses Actual Individual Consumption (AIC) per capita, expressed in Purchasing Power Standards (PPS), to measure material well-being. This indicator accounts for all goods and services consumed by households, whether paid for directly or provided by governments and nonprofits.
Hungary’s position in the EU
According to Euronews’ reports, in 2023, Hungary’s AIC per capita was just 70% of the EU average, a figure it shares with Bulgaria, marking the lowest levels among member states. In contrast, Luxembourg led the EU with an AIC per capita of 136%, or 36% above the EU average. Neighbouring countries like Slovakia and Croatia also recorded below-average material welfare, but Hungary’s standing underscores the persistent economic challenges faced by Central and Eastern European nations.
Regional trends and comparisons
While nine EU countries—including Germany, Austria, and the Netherlands—exceeded the EU average for household material welfare, Hungary continues to trail significantly. Notably, countries like Poland (83%), Czechia (81%), and Greece (80%) outperformed Hungary in this measure. Among non-EU countries, Türkiye achieved an AIC per capita of 84% of the EU average, surpassing Hungary and eight other member states. This highlights the growing economic divergence between EU and candidate countries, with Türkiye standing as an exception due to its relatively high material welfare.
Changes over time
Over the last five years, Hungary’s AIC per capita saw slight improvements, climbing from 62% in 2020 to 70% in 2023. This modest growth aligns with trends in other lower-ranking EU nations, such as Bulgaria, but contrasts with declines in wealthier member states like Denmark and Finland.
Insights on material welfare
“A household’s material well-being can be expressed in terms of its access to goods and services”, Eurostat writes. Hungary’s position at the bottom of the EU rankings highlights larger regional disparities in living standards. While Western and Nordic countries consistently report higher material welfare, Central and Eastern European nations, including Hungary, struggle to close the gap. These differences emphasise the challenges in achieving economic parity across the bloc. As Hungary continues to negotiate economic pressures, the AIC per capita data serves as a stark reminder of the ongoing need for targeted policies to improve household material welfare.