Hungarian households felt a 22 percent increase in consumer prices around the country in April, despite real prices increasing by 9.5 percent, according to GKI Economic Research’s latest representative analysis, published on Wednesday. Researchers note that the population’s views could have been impacted by recent events. The Hungarian Central Statistical Office criticized the report for alleging that “subjective feelings would provide a more specific picture than the facts.”
On Tuesday, the Hungarian Central Statistical Office (KSH) reported a 9.5 percent annual growth in consumer prices in April, a one percent increase from March.
Interestingly enough, the difference between official and survey-based perceived inflation has averaged more than 11 percent per month over the past four years, with that divergence increasing steadily. Both indicators have increasingly significantly since the middle of 2021, GKI wrote in its most recent report on Wednesday.
Perceived Consumer Price Increase Twice as High as Real Price Growth
Reporting for the European Commission, GKI also asks Hungarians about their expectations for price increases over the next 12 months. In March of 2022, the Hungarian population expected a 23 percent increase for the following year, just above the expected rate of forint deterioration.
GKI notes that if the perceived and real price increases diverge from one another so greatly, pensions, consumption, earnings, and real GDP all appear much better than they actually are. This may contribute to Hungarians’ general unhappiness in the EU despite the Hungarian economy’s growth and the population’s increased income, excluding inflation, in recent years, the research institute suggests.
The difference in real and perceived increases could also be impacted by KSH’s measuring of prices in relation to statistics that are two years older. This is especially the case if the prices of certain, high-volume products (fuel) change rapidly. There is also a difference in the 944 products used as indicators and the entire scope of purchased products.
KSH Responds to “Subjective” GKI Report
On Thursday, KSH shared a newer report responding to GKI’s survey, in which it proposed answers as to why Hungarians may feel that life has become so much more expensive. According to the Statistical Office, there are “known psychological factors” that “distort personally perceived inflation,” such as a fixation for negative memories, or an individual’s “being influenced by external sources (media, news heard from others,” which can lead to “distortions in perceived inflation.”
The National Statistical Office criticized the GKI survey for reporting “as if subjective feelings would provide a more specific picture than the facts.”
KSH also rejected GKI’s proposal that its statistics were not being weighed properly, saying that “since 2021, in line with the recommendations issued by Eurostat,” it has also based its measurements “on the latest three quarters of the year preceding the reference period.”
It is worth restating that GKI made it clear that its responses were subjective, but still, it would be wrong not to take into account the emotions of the Hungarian public on such a significant issue.
Featured photo illustration by Zsolt Szigetváry/MTI