Hungary: Inflation falls to over two-year low in December
Inflation eased to 5.5% in December, following November’s 7.9%. December’s reading marked the lowest inflation rate since September 2021. Looking at the details of the release, the change in prices for clothing and footwear was largely stable in December, while prices for food and non-alcoholic beverages dropped after growing in the previous month. Meanwhile, housing and energy returned to growth following the previous month’s decline. Moreover, prices for transport dropped.
In addition, the trend pointed down, with annual average inflation coming in at 17.1% in December (November: 18.8%). Meanwhile, core inflation fell to 7.6% in December, from the previous month’s 9.0%.
Finally, consumer prices dropped 0.32% in December over the previous month, which was below the flat result recorded in November. December’s result marked the weakest reading since May.
Commenting on the release, Peter Virovacz and Dávid Szonyi, economists at ING, stated:
“Based on the latest data, we conclude that inflation could slow further in early 2024, and ING’s latest forecast suggests that it could fall below the upper band of the central bank’s 4% inflation target tolerance band as early as January. But this will be more a result of base effects than the lack of underlying price dynamics. However, it would be premature to declare victory as positive base effects will soon run out. As a result, we expect inflation to rise again in the second half of this year. While inflation could average a tad below 4% in the first half of the year, it could be around 5% in the second half of 2024 and around 6% at the end of this year.”