Presenting the report, MNB director András Balatoni put higher wage increases, a dynamic expansion of consumption, a persistently high external inflationary environment, and a strengthening of risk aversion on emerging markets among the upside risks to the inflation outlook.
A global economic slowdown parallel with the fourth wave of the coronavirus pandemic is a downside risk, he added.
The report shows that MNB expects inflation to fall back to the 3% mid-term "price stability" target in the second half of 2022, but not before another spike. The central bank augurs a further rise in inflation in the autumn months and puts CPI over 5% for the rest of the year, before returning to the 2%-4% tolerance band in Q2 2022 and stabilizing around the 3% target in the second half.
Balatoni said inflation in 2021 is being driven higher by "the cost of the recovery", higher global raw material prices, an increase in service prices as the economy re-opens, and rising prices for industrial goods boosted by higher feedstock prices and supply chain interruptions.
He added that cost-side factors would continue to impact prices in 2022, but inflation would be driven lower by proactive monetary policy, base effects and the elimination or "significant reduction" of supply chain anomalies.
Balatoni said a pickup in battery production in Hungary could compensate in part for the impact of the global semiconductor shortage on the local automotive industry.
