Nagy said eliminating the motor fuels price cap early in December could raise inflation by half a percentage point to more than 25% in January. Food prices could peak "around February or March," he added.
Nagy augured a sharp decline in CPI after that and put year-end inflation in the single digits. He blamed higher prices mainly on external factors, such as dearer energy, but also acknowledged the effect of the weaker forint, excise tax and health product fee increases, and higher wages on headline CPI.
Nagy said that if inflation falls rapidly by April, caps on staples, such as flour and eggs, could be phased out.
While the National Bank of Hungary believes retailers are passing on 100% of their losses on price-capped products to consumers, Nagy, a former central bank deputy governor, said that ratio is "at most 60-70%."
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