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Hungarians with a new inflation record this cycle. Consumer prices are expected to increase further

Hungarians with a new inflation record this cycle. Consumer prices are expected to increase further

The CPI inflation in Hungary recorded in October 2022 is the highest in 26 years. However, according to economists, this local peak may not be sustained for a long time, because the inflationary pressure in the Magyars’ economy is high, which is indicated by the high level of the so-called core inflation, and the headline CPI may reach 25% by the end of the year. (even the Hungarian authorities point to this level). And this despite the government-imposed price cap on fuel, household electricity, mortgages and basic food products.

Core inflation, i.e. a reading that does not take into account the prices of energy, fuel and food directly, increased 22.3% in October. year on year from 20.7 percent in September (i.e. it broke the forecasts of 21.4 percent). This demonstrates the spreading of inflation across the economy and the widespread second-round effects (passing on of rising producer costs to end-users) as a result of strong domestic demand. It is worth noting that core inflation – which is rare – in Hungary is higher than the main CPI. The main reason are anti-inflationary shields lowering the CPI reading.

The consumer inflation counted year on year in Magyars - similarly to other countries in our region - is accelerating from month to month.

The consumer inflation counted year on year in Magyars – similarly to other countries in our region – is accelerating from month to month.

“The increase in inflation in October to 21.1% year-on-year is mainly due to the acceleration in food price growth, but the price pressure in terms of categories is extremely wide,” Magyar Bankholding analyst Gergely Suppan, quoted by Reuters, wrote in the note. Food prices increased by 40 percent year on year. (eggs and bread, 88% and 81%, respectively). Electricity in households has increased by more than 64 percent. Every year.

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