In June, consumer prices in Hungary rose by an average of 4.6% compared to the same period of the previous year, which was roughly in line with the analysts’ consensus. In May, the increase was 4.4%. Compared to last month, prices rose by 0.1% in June, which was slightly below expectations.
“Annual core inflation decreased to 4.4% from 4.8% in May, indicating a slight decrease in inflationary pressures,” MBH Bank senior capital markets analyst Márta Balog-Béki commented on the fresh data published by the Central Statistical Office on July 8.
According to Balog-Béki, the picture remains mixed in the case of food and services, with food prices increasing both monthly and annually (despite the profit margin freeze introduced by the government). In the case of services, despite the increase in the monthly indicator, the annual rate continued to decline.
According to government announcements, its margin-limiting measures will remain in effect until the end of August, so there is no need to expect a sudden increase in food prices before then, Balog-Béki says. In fact, it is increasingly worth considering that the measure may remain with us for a more extended period, and may only end sometime in 2026 at the earliest, she adds.
According to her, after the temporary disinflation of the summer months, inflation is expected to return to around 4.5% by the fall, and then slowly decline again to a level approaching 4% by December.
“We continue to expect an average inflation rate of 4.5% this year, but we see an upward risk in our inflation expectations for 2026,” Balog-Béki says. Elsewhere, it seems the June inflation figure did surpass some analysts’ expectations.
“The data was slightly better than our expected 4.7%. The further slowdown of core inflation, to 4.4% from 4.8% in May, is favorable,” notes Erste Bank analyst Orsolya Nyeste.
She adds that, on a monthly basis, food prices increased by 0.1%, which was slightly better than Erste’s expectations, and this is where the slight positive surprise came from. However, the picture is colored by the fact that service inflation remains high, she says.
According to Nyeste, the overall inflation picture is mixed. In the coming months, the stability of the forint, the easing of labor market tightness, and the expected slowdown in wage growth all combine to support disinflation.
The latter should be most evident in the declining inflation of market services. However, this year’s unfavorable weather poses a continuous upward risk to food price developments, despite the government’s price-limiting measures, she cautions. Nyeste expects the annual inflation index to fluctuate predominantly in the 4-5% range until the end of the year.
“After the release of the current data, we continue to maintain our inflation forecast for an annual average of 4.7%,” she adds.
For the near future, the July inflation data may show a significant slowdown. At this time, the mandatory sales promotion from last summer will be incorporated into the base, according to Dániel Molnár, head analyst at GFÜ Gazdaságkutató Központ.
“However, even with this, we expect the rate of monetary deterioration to remain above 4% until the end of the year and to return to the central bank’s tolerance band only at the beginning of next year, when the significant price increases at the beginning of this year have run out,” he says.
With the easing of tensions around the conflicts in the Middle East, the greatest risk to the inflation trajectory is the drought situation. Last year’s poor agricultural harvest resulted in a marked increase in the prices of raw materials, and similar risks are significant for this year. According to Molnár’s forecast, consumer prices may increase by an average of 4.5% this year and by 3.6% in 2026.
In the meantime, the Central Statistical Office has published the latest industrial production data. In May, the volume decreased by 1.3% on a monthly basis, while the decline was 2.6% on an annual basis. Looking at the longer term, after filtering out the effect of monthly fluctuations, the volume of industrial production in the spring months was at the same level as experienced in the winter months, indicating that the recovery has not yet begun.
“Looking ahead, we do not expect any significant changes in industrial production in the coming months. There is still considerable uncertainty regarding the outlook,” comments Dániel Molnár of GFÜ.
“We expect a turnaround towards the end of the year; if the trade conflicts are resolved and external demand starts to pick up, this could move the industry off its low point. In parallel, production in large factories (CATL, BYD, and BMW) may gradually start in the last months of the year, which, however, are only expected to give a new impetus to industrial production from next year, supplemented by the capacity expansion of the Mercedes factory in Kecskemét,” he adds.
With the exception of a few months, the output of Hungary’s industrial production volume has been consistently less favorable than the average of the 27 EU member states since the beginning of 2023.
By the end of the first quarter of 2025, industrial production had begun to grow in the EU as a whole, including Germany, as well as in the Czech Republic and Slovakia, which also have a significant automotive industry. However, production in Hungary continued to decline, according to an analysis by the research think-tank GKI. Its analysts predict that industrial production may start to grow slowly in the second half of the year.
This article was first published in the Budapest Business Journal print issue of July 11, 2025.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
