Hungarian Inflation Accelerates Less Than Expected in October

Key Points

Hungary's consumer price index (CPI) rose by 21.1% year-on-year in October, below market expectations of 21.3%.
The slowdown in inflation was primarily driven by a decrease in energy prices.
Core inflation, which excludes volatile food and energy prices, accelerated to 18.5% year-on-year, indicating that inflationary pressures remain elevated.

Analysis

Hungary's inflation rate has been on a steady upward trend in recent months, driven by rising energy and food prices. However, the October data suggests that inflation may be starting to moderate. The slowdown in headline inflation was primarily due to a decrease in energy prices, which fell by 1.4% month-on-month. This was offset by an increase in food prices, which rose by 0.6% month-on-month.

Despite the slowdown in headline inflation, core inflation continues to accelerate. Core inflation rose to 18.5% year-on-year in October, up from 17.6% in September. This indicates that inflationary pressures remain elevated, and the central bank is likely to continue raising interest rates in order to bring inflation under control.

The Hungarian government has taken a number of measures to try to contain inflation, including introducing price caps on certain essential goods and services. However, these measures have had limited impact, and inflation is expected to remain high in the coming months.

Impact

The high inflation rate is having a significant impact on the Hungarian economy. Consumers are facing higher prices for goods and services, and businesses are struggling to cope with rising input costs. The central bank has raised interest rates several times this year in an effort to bring inflation under control, but this is also having a negative impact on economic growth.

The Hungarian government is facing increasing pressure to take action to address the inflation problem. However, it is unclear what measures the government can take that will be effective without causing further economic damage.

Conclusion

Hungary's inflation rate is still high, but it is starting to moderate. However, core inflation is still accelerating, and the central bank is likely to continue raising interest rates in order to bring inflation under control.