Inflation will fall sharply from the second half of next year, and a “rapid rebound” of slowing economic growth is also expected from July, according to the Magyar Nemzeti Bank (MNB), Hungary’s central bank.
András Balatoni, director of the Economic Forecast and Analysis Directorate at MNB, told an online press conference on Thursday that these tendencies are driven by both external and internal factors, MTI reports.
Balatoni cited decreasing global energy and commodity prices, the recovery of production chains, and falling global food prices and transport costs as external factors that could reduce inflation. Among the internal factors, he cited the slowdown in economic growth, the decline in disposable incomes and consumption, and the fading effects of tax measures.
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Balatoni pointed out that the high Hungarian inflation rate, which rose to over 20 percent by the end of the year, was caused by rising energy prices and costs, which were high by international standards. Companies were repricing products above cost, with corporate profits soaring by 34 percent compared to the previous period, he added. Balatoni went on to say that profits were also rising in other regions, but not at such high levels, and said that inflation could no longer be explained by rising costs, and that “companies were overcompensating.”