Money forint

Hungary takes the second worst place since 2000 in the EU’s inflation rates even though that, in the past few years, short-term inflation statistics have improved in the country. Utility and healthcare prices have increased significantly and are most affected by inflation, says

Where is Hungary situated in European economic rates?

According to Eurostat rates, inflation has been the second highest since the turn of the century between EU member states. With regards to economic growth, the V4 countries (the Czech Republic, Slovakia and Poland) have been ahead of us since last year. In general, the report reveals large differences between Eastern and Western European states’ economic performance, as inflation rates are significantly higher in the East. While prices have doubled in Hungary since 2000 with an inflation rate of 98%, this is clearly far from the countries with the best economic indicators in the EU: Germany and Sweden (28.6% and 29.1%).

Inflation Eurostat statistics
Source: Eurostat, Harmonised index of consumer prices (HICP) – Total.

Which areas are most affected by this change in inflation?

Concerning Hungary, the highest increases could be observed in healthcare (+156.8% between 2000-2017) and utility prices („housing, water, electricity, gas and other fuels”) with more than 139% increase.

MNB’s latest inflation report raises attention to the presumably higher inflation in 2018 and 2019. Nevertheless, short-term inflation indicators can vary depending on the monetary environment and even a more rigid, austerity policy lately implemented by the European Central Bank. It is also beneficial that core inflation rates have not yet started to increase.

Another significant economic indicator is GDP:

Following the economic crisis, Hungarian GDP numbers have exceeded the EU average performance since 2012 with a 4.4% economic increase in the first quarter this year.

In the V4 group, it is only Poland that overstepped our increase with the second best rates in the EU (with about 5% yearly increase). Hungary’s first quarterly growth puts us into the 4th place Europe-wide.

Unemployment rates reflect a mixed picture: while in North-Eastern Hungary, rates fall within 5.8-9.5%, the central regions show lower numbers.

However, Hungary’s place in the ever more rigid world economic environment remains questionable as low inflation rates are coming to an end together with the era of easy, fast growth. It is to be seen how V4 countries cope with these challenges of austerity in the future.


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