Hungarian Parliament building

Hungary Inflation October 2023

Hungary: Inflation falls to over one-year low in October

Inflation eased to 9.9% in October from September’s 12.2%. October’s result represented the weakest inflation rate since April 2022. Looking at the details of the release, prices for clothing and footwear increased at a faster pace in October. Prices for food and non-alcoholic beverages dropped at a more moderate pace. Moreover, prices for transport dropped.

Accordingly, the trend pointed down, with annual average inflation coming in at 20.1% in October (September: 21.2%). Meanwhile, core inflation fell to 10.9% in October, from the previous month’s 13.1%.

Lastly, consumer prices fell 0.12% from the previous month in October, swinging from the 0.37% rise recorded in September. October’s result marked the weakest reading since May.

Inflation should continue its downtrend next year, benefiting from a high base of comparison. However, it will remain above the Central Bank’s target. Stronger-than-expected wage growth poses an upside risk.

Commenting on the outlook, ING’s Peter Virovacz stated:

“We forecast an average price increase of 5-6% next year, with risks tilted to the upside. The increase in excise duty on fuel from January, the reshuffled extended producer responsibility (EPR) scheme, the introduction of the mandatory Deposit and Return System ensuring the return of beverage packaging for recycling or reuse, the expected high minimum wage increase, significant geopolitical risks, and the fiscal situation which may justify some tax increases, all pose major inflation risks that could stop or in the worst case scenario, reverse this year’s disinflationary trend in 2024.”

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