Hungary Inflation Surges On Household Energy Prices

hungary-inflation-surges-on-household-energy-prices

Hungary’s inflation accelerated in September on a surge in household energy prices, the Hungarian Central Statistical Office said Tuesday.

Consumer price inflation rose more-than-expected to 20.1 percent in September from 15.6 percent in August. Prices were forecast to climb 19.4 percent.

Inflation has been above the central bank’s target range of 2-4 percent since March 2021. This was the first time that inflation exceeded 20 percent since 1996.

An increase of 35.2 percent was recorded for food. Due to the changes in regulation on household utility prices effective from August 1, electricity, gas and other fuel prices surged 62.1 percent.

Consumers paid 14.7 percent more for consumer durables. At the same time, alcoholic beverage and tobacco prices rose by 13.2 percent.

On a monthly basis, consumer prices moved up 4.1 percent, following a 1.8 percent rise in August, data showed.

Core inflation advanced to 20.7 percent in September from 19.0 percent a month ago. This was the highest since August 1996 and slightly above economists’ forecast of 20.6 percent.

Month-on-month, core consumer prices rose 1.7 percent after climbing 2.2 percent.

Inflation in Hungary is expected to strengthen further in the coming months, Peter Virovacz, an ING economist said.

Inflation is forecast to peak around 21 percent early next year, as the government is likely to keep the price caps in place, extending them before they expire by the end of the year, the economist added.

As inflation continued to stay above the tolerance band, the bank has raised the key interest rate in every policy session since June last year. At the last policy session in September, the bank hiked the base rate by a massive 125 basis points.

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