Economy 8 April 2025, 1:05pm

Inflation did grow in some areas in Hungary in March

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Inflation developments were broadly favourable in Hungary in March, but the central bank's (MNB) assessment still reveals some factors that cloud the overall picture.

Hungary's consumer prices rose 4.7% year-on-year in March 2025. The "only" effect of the margin cap (introduced on 17 March) was that there was no surge in food prices which, unlike in the previous months, would have pushed up the headline index. The marked fall in the CPI, which was larger than expected, was due to the base effect the prices of certain services and fuel prices.

The National Bank of Hungary (MNB) has issued its customary assessment of the latest inflation data. It said that most product groups contributed to the decline in the annual consumer price index, which was partly offset by the accelerating price increases of tradables, alcohol and tobacco products.

At the same time, the MNB draws attention to some interesting facts that could serve as a warning about the sustainability of disinflation. From the MNB's indicators capturing more persistent inflation trends on an annual basis,

the inflation of sticky-price products rose slightly to 5.9%.

This is surprising given that the headline CPI and the central bank's other alternative measures of inflation have fallen significantly. This suggests that there are parts of the economy where this disinflation is not evident.

Short-based price developments show a similar picture. In a shorter term (annualised, 3-month-on-3-month) comparison, our indicators showed a deceleration in inflation, and a pick-up in core inflation, the central bank said.

Households’ inflation expectations remain at a high level, following the increase in the second half of last year. In March, the percentage of respondents, who expect prices to rise at a slower pace, rose compared to February. (Chart 11).

Corporate expectations for services and retail price changes fell in March. The rising trend in corporate expectations, which started in October, has stalled (Chart 12).

Further declines are expected in April as the full impact of the margin cap kicks in, with uncertainty over price increases from some of the major operators, but the government seems determined to keep them in check.