In the second month of the year, consumer prices were 1.4% higher on average than a year earlier, and rose by 0.1% on average over the course of the month, reinforcing the picture of subdued price pressures at the start of the year.
According to Orsolya Nyeste, chief analyst at Erste Bank, the data not only beat the market expectations but also undershot her team’s own forecast of 1.5%. Core inflation also eased noticeably, declining from 2.7% in January to 2.1% in February.
“The structure of inflation did not bring major surprises,” Nyeste noted, even so. Food prices rose only 0.1% month-on-month, reflecting the continued impact of government-imposed retail margin caps, as well as broader global disinflationary trends observed in recent months.
However, these trends may not last indefinitely. Rising global energy prices could reverse the current disinflationary environment in the months ahead, while the future of domestic price controls remains an important source of uncertainty for forecasts.
Fuel prices increased by 0.6% month-on-month, broadly in line with expectations. Yet economists expect stronger increases in March as the statistical office accounts for the surge in oil prices and the weakening of the Hungarian forint following the geopolitical tensions, not least the U.S.-Israeli bombing campaign against Iran.
To cushion the impact, the government has introduced a combination of fuel price caps and excise duty reductions, aiming to limit the pass-through of energy shocks into consumer prices. Another unexpected development was a 1.7% monthly decline in household energy costs, driven primarily by a 15.7% drop in district heating prices, Nyeste added.
Despite the favorable February figure, analysts caution that the current level may mark the year’s low. Market volatility and geopolitical tensions have pushed global energy prices higher and weakened the forint, both of which tend to feed into domestic inflation. Although markets showed some stabilization during the week, heightened volatility makes it harder to anchor inflation expectations.
Nyeste believes that suppressed inflation may also be present in the system due to government price controls and tax deferrals. Once these measures are phased out, price pressures could re-emerge.
Already in March, the rise in fuel prices and the less favorable base effects could push the annual inflation rate back above 2%, she said. By the final quarter of the year, inflation may even exceed the central bank’s tolerance band of 2-4%.
Analysts at MBH Bank likewise emphasized that the February data came in below expectations, noting that it was 0.2 of a percentage point lower than their forecast and 0.3 pp below the market consensus.
They highlighted that annual food inflation has nearly disappeared, largely due to last year’s high base, while the price increase in services has also shown signs of moderation.
“The first two months of the year indicate that there have been no significant repricing waves in the economy, which is encouraging,” analysts Márta Balog-Béki and Zoltán Árokszállási wrote.
Under their baseline scenario, average annual inflation in 2025 could reach around 2.9%, although geopolitical tensions pose upside risks to this outlook.
According to Dániel Molnár, lead analyst at GFÜ Economic Research, despite the February inflation data exceeding expectations again, the outlook remains uncertain. He expects inflation to accelerate in March, partly due to base effects and higher fuel prices linked to geopolitical tensions. Nevertheless, the overall trajectory could still remain around or below the central bank’s 3% target in the first half of the year.
Government price protection measures are likely to keep fuel prices from fully reflecting global oil market volatility at least until May. However, uncertainty remains high regarding the future of price caps and other administrative controls.
“Overall, we believe the geopolitical developments will cause only a temporary spike in inflation,” Molnár said. “Price growth may move toward the upper edge of the central bank’s tolerance band by the end of the year, before stabilizing around the 3% target by mid-next year.”
Alongside the inflation data, Hungary’s industrial sector also delivered a modest positive signal. Industrial production rose 1.5% month-on-month in January and increased by 0.3% when compared with January 2025, marking the first annual expansion in two years.
Nevertheless, economists caution against interpreting the data as a definitive turning point. Production levels remain only slightly above recent lows, and external demand remains fragile.
The Hungarian Central Statistical Office reported that the seasonally and calendar-adjusted export volume fell 3.2% compared with December 2025, suggesting weaker external demand rather than a broad-based recovery in industrial activity.
This concern is reinforced by developments in Hungary’s largest export market. In Germany, industrial production unexpectedly declined by 0.5% in January, instead of the 1% increase analysts had anticipated.
For now, Hungary’s economy appears to be entering the year with unexpectedly low inflation and tentative industrial stabilization, but the combination of geopolitical tensions, volatile energy markets, and policy uncertainty means the calm may prove temporary.
This article was first published in the Budapest Business Journal print issue of March 13, 2026.
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