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Inflation to Accelerate Its Decline in Coming Months

Hungary Today 2023.05.09.

Inflation in Hungary may have eased for the third consecutive month, according to analysts interviewed by news site Világgazdaság (VG), saying that April’s data may already reflect the actions of the past period. The Central Statistical Office will publish the latest inflation data on Wednesday.

Inflation in Hungary is expected to continue to be moderate in April, with the year-on-year index showing a marked slowdown for the first time since the peak in January, analysts told Világgazdaság ahead of the publication of April inflation data by the Central Statistical Office on Wednesday.

According to the consensus of VG analysts, inflation in April rose by 24 percent year-on-year, after 25.2 percent in March, and by 0.8 percent on a monthly basis.

However, an expected annual index slipping to 24 percent still implies an extremely high inflation environment. The moderation is mainly due to the high base last year, as inflation is still expected to remain high at 0.7 percent on a monthly basis.

There is no doubt, however, that if the monthly rate of change were really ‘only’ this much, it would bring about a slow pace of price increases not seen since the end of 2021, Péter Virovácz, senior analyst at ING Bank, pointed out in his comments to VG. He also emphasized that for the Central Bank’s 3 percent inflation target to be sustainable, the rate of change in monthly prices would need to be around 0.25 percent month-on-month for a year.

But this re-pricing could push the April figure sharply higher, so the fight against inflation is far from over. “Despite the slowdown, we cannot sit back,” he said, adding that if only because the structure of inflation will continue to be unfavorable. Year-on-year inflation in services could continue to strengthen as the re-pricing of telecoms firms appears in official data, just as holiday services could become significantly more expensive. Conversely, on the positive side, inflation may have been pulled down by a moderation in the inflation of fuels, household energy and consumer durables.

Photo: Pixabay

He said that the biggest factor of uncertainty remains food price developments. In March, official statistics did not at all reflect the everyday experience of being bombarded with bargain prices from grocery store advertisements everywhere. The question is what will happen in this respect in April.

Fuel prices have continued to fall slightly, but service prices are an upside risk, especially as several telecoms companies have increased their tariffs. However, the introduction of a toll in May inflation could already moderate the pace of service price increases, the expert pointed out.

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Featured image: Pixabay

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