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Hungary Inflation November 2021

Hungary: Inflation comes in at highest level since August 2007 in November amid widespread price pressures

Consumer prices increased 0.70% in November over the previous month, following the 1.10% jump recorded in October, which had marked the steepest rise in prices since July 2020. The sharpest price increases were recorded for motor fuels, clothing and footwear and consumer durables.

Inflation spiked to 7.4% in November from October’s 6.5%. November’s reading represented the highest inflation rate since August 2007. Meanwhile, the trend pointed up, with annual average inflation coming in at 4.7% in November (October: 4.3%), the highest reading in over eight years. As a further sign of widespread inflation pressure, core inflation jumped to 5.3% in November from the previous month’s 4.7%, marking the highest print since August 2008.

Commenting on the release, Peter Virovacz, Hungary senior economist at ING, stated:

“It is clear that inflation is no longer driven by supply shocks, but by demand-related pressure and second round effects. Rising commodity and labour costs are increasingly being incorporated into consumer prices. The pricing power of companies is growing as aggregate demand continues to pick up while supply is limited. We can hardly expect a substantial change in this in the months ahead. The supply disruptions (energy crisis, transportation issues, labour shortages and lack of spare parts) will remain with us through the first half of 2022, at least.

Meanwhile, fiscal policy will further stimulate aggregate demand, and this will be coupled with significant wage growth. Based on this, we can expect elevated inflation in the coming months as well. It seems quite likely that inflation in December will remain above 7% but even in the first quarter of next year we could see inflation well above 6%. In this respect, next year’s average inflation could be more than 5%, an acceleration compared to 2021.”

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