Hungary’s annual inflation rate slowed to 1.7 per cent in June, its lowest level in recent months, with economists attributing the favourable trend primarily to the strong forint and declining food prices.
According to figures released by the Central Statistical Office (KSH) on Tuesday, consumer prices rose by 1.7 per cent year-on-year, down from 1.8 per cent in May and 2.1 per cent in April. Prices were unchanged from the previous month.
Economists said that the appreciation of the forint has helped curb the cost of imported goods, while government measures limiting food retail margins have also contributed to lower inflation.
Péter Virovácz, chief economist at ING Bank, noted that food prices and the cost of durable consumer goods have both eased in recent months, trends he partly attributed to the stronger currency.
At the same time, services remain the main source of price pressures, reflecting rising labour costs in labour-intensive sectors. Further increases are expected later this year as telecommunications and financial service providers implement postponed price rises.
ING forecasts average inflation of 2.1 per cent this year and expects the central bank to continue cutting interest rates in the coming months.
János Nagy of Erste Bank described the June figure as a positive surprise and said the combination of a strong forint and existing price controls has created significant disinflationary pressure. He added that further rate cuts now appear virtually certain.
Dániel Molnár of the GFÜ Economic Analysis Centre likewise cited the stronger forint and the continuation of food retail margin caps as the key factors behind the low inflation reading. He expects inflation to remain below the central bank’s target through the end of the year, barring any major external shock.
Gábor Regős, chief economist at Gránit Fund Management, also highlighted falling global food prices and the strong currency as important contributors to the easing of inflation. In his view, the latest data provide ample room for the National Bank of Hungary to proceed with its planned rate reductions.
Related articles:
At a time when public debate is increasingly polarized and superficial, Hungarian Conservative remains committed to depth, intellectual honesty, and independent conservative thought.
Producing high-quality journalism requires resources. Your contribution helps us expand our coverage, reach new audiences, and keep our content accessible.
Please consider supporting our mission.
