Inflation Expected to Dwindle Further in Upcoming Months
Latest Data from Hungary Suggests Inflation May Have Eased
Analysts from the news site World Economy (VG) suggest that inflation in Hungary may have eased for the third consecutive month. The Central Statistical Office will publish the latest inflation data on Wednesday. Figures are expected to show moderate inflation, with a year-on-year index slowing down for the first time since the peak in January, due mainly to high-base levels from the previous year. The consensus of VG analysts is that inflation for April rose by 24 percent year-on-year, following the March figure of 25.2 percent. Inflation may have already been moderated by the decrease in fuel prices, household energy and consumer durables. However, annual inflation slipping to only 24 percent still indicates an extremely high inflation environment. The biggest factor of uncertainty is food price developments. In March, official statistics failed to reflect the everyday experience of being bombarded with cheap prices from supermarket promotions everywhere.
Despite the expected drop in inflation, comments from Peter Virovácz, senior analyst at ING Bank suggest that the fight against inflation continues. For the Central Bank’s 3 percent inflation target to be sustainable, the rate of change in monthly prices needs to be around 0.25 percent month-on-month for a year. Re-pricing could push the April figure sharply higher and there is no room for complacency. Year-on-year inflation in services could continue to strengthen as the re-pricing of telecoms companies appears on official data, while holiday services may become significantly more expensive. On the positive side, inflation may be tempered by moderation in the inflation of fuel, household energy and consumer durables. The introduction of a toll in May could also moderate the pace of service price increases. Inflation figures from the Central Statistical Office on Wednesday will indicate the next step in Hungary’s fight against inflation.
