Hungary's inflation rate slowed to 4.2% year-on-year in April, according to data released by the Hungarian Central Statistical Office (HCSO), but analysts warn that the apparent improvement may be misleading. Despite government interventions such as price curbs on essential goods, underlying inflationary pressures remain, raising concerns over the long-term outlook.
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The April headline inflation figure was notably higher than expected, with ING economists forecasting a drop to around 3.5%. 'The slowdown in the pace of price increases was weaker than expected; it was essentially more of an unpleasant surprise,' the ING report notes. The discrepancy underscores the volatility introduced by short-term state interventions rather than sustainable structural shifts in pricing.
While core inflation fell to 5.0% YoY – down 0.7 percentage points from March – the ING team highlights that 'not much has changed, with inflation expectations generally remaining elevated.' Price hikes in telecom and financial services, although 'voluntarily' delayed until after next year's general election, have still been recorded statistically, further muddying the inflation picture.
The report stresses the psychological and behavioural impact of ongoing state interventions. 'Consumers may interpret these measures as a sign that the problem is so serious that more is needed to keep inflation under control,' ING warns. Such perceptions risk undermining consumer confidence, especially as prices for uncontrolled goods continue to rise.
Looking ahead, ING projects inflation to hover between 4.0% and 5.0% throughout the remainder of 2025, with an annual average of 4.5%. For 2026, the forecast has been revised upward to 4.0%. 'Inflation being suppressed now will re-emerge later,' the report concludes, warning that such short-term fixes could entrench inflation above the central bank's target over the long run.
'The repricing that we are trying to avoid now through interventions will come back later, only stronger,' the ING economists caution, emphasising that Hungary's inflation strategy may be storing up problems for the future rather than solving them.
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