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Draught to trigger inflation - Hungary

Food

Research institutes investigated the potential effects of recent draught, and may as a result modify forecasted inflation.

The figure indicated by GKI Economic Researcher is 7%, but may be subject to later modification due to draught, said head of research Tamás Kopik. Prices of certain food products, for instance vegetables and fruits, are more sensitive than others. These products are directly affected by dropouts in production due to adverse weather. On the other hand, more processed items are less affected. Seasonal food products, such as potato, fruits and vegetables are only a minor component in calculating inflation (3.4%), however, they may trigger a couple of tenths of a percent increase, while bread for instance will become less expensive than wheat, as it is a more processed product. Low agricultural production may appear in inflation during the forthcoming 3 months, but also affect next year’s inflation. Kopint-Tárki raised its forecast from 6.8% to 7.5% due to draught two weeks ago, said researcher Márton Szabó. Inflation may even exceed this rate, added Éva Palócz, director of Kopint-Tárki. Inflation expected by the government may be subject to change in October, when the Central Statistics Office (KSH) publishes September’s macro data. (Gazdasági Rádió)

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