After experiencing a 14-month decline, Hungary witnessed a slight uptick in inflation rates in April, with annual inflation reaching 3.7% from a low of 3.6% recorded in the previous month, according to data from the Hungarian Central Statistical Office. The marginal increase follows a period of declining prices, signaling a potential shift in the country’s economic trajectory.
Price Trends and Sectoral Analysis
In April, prices in Hungary rose by 0.7% compared to March, marking a slight deceleration from the previous month’s 0.8% increase. Year-on-year comparisons reveal notable fluctuations in various sectors, with services becoming 9.5% more expensive, particularly driven by a significant rise in rents by 14%. Conversely, household utility costs, including electricity, gas, and fuels, experienced a 4.5% decrease, while alcoholic beverages and tobacco prices saw a 3.8% increase.
Food Inflation and Core Measures
Food inflation, a significant contributor to Hungary’s double-digit price surge in the past year, moderated to 1% in April. While certain items such as sugar and chocolate witnessed price hikes, others like eggs saw a notable decrease in prices by 20.3%. Core inflation, excluding volatile food and energy prices, stood at 4.1% in April, down from 4.4% in the previous month, influencing the decision-making process of the Hungarian National Bank.
Monetary Policy and Economic Outlook
The Hungarian National Bank, responding to inflationary pressures, continued its gradual easing of monetary conditions by reducing the benchmark interest rate to 7.75% in April. Market expectations anticipate further cuts, potentially bringing the rate down to 6.5-7% by the end of June. However, analysis suggests a possible slowdown in the pace of rate reductions in the future. Despite inflationary concerns, the Hungarian government remains optimistic, forecasting a 2.5% GDP growth for the current year, with expectations of a more robust economic expansion reaching 4% in 2025.
SOURCE: Ref Image from Hungary Today
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