Hungary Inflation

Inflation ebbs in July from the prior month

Latest reading: Consumer prices increased 1.1% on a year-on-year basis in July, following a 1.7% increase in the prior month. July's reading was the weakest since November 2016 and remained below the Central Bank’s 2.0–4.0% target range. The print also surprised markets to the downside. Relative to the previous month's data, there were milder price pressures for clothing and footwear (-0.7% on a year-on-year basis vs +0.3% in June), food and non-alcoholic beverages (-4.4% vs -2.4% in June), housing and energy (-0.1% vs +1.0% in June) and transport (+0.6% vs +1.5% in June). Meanwhile, core consumer prices increased 1.9% on a year-on-year basis in July, following a 2.0% rise in the prior month. Lastly, consumer prices were down 0.13% in July in month-on-month terms, following a flat reading in the previous month.

Panelist insight: ING’s Peter Virovacz and Zoltán Homolya commented: “Looking ahead to the coming months, service inflation is likely to remain high due to seasonal factors and previously announced price rises. The strength of the forint is expected to continue to limit imported inflation, thereby controlling price changes for durable goods and food and probably fuel. However, the potential price-increasing effects of the drought and the current energy crisis may become apparent in 2027.”

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