The Hungarian Central Statistical Office (KSH) published its retail sales data for February on April 8. Overall, retail sales volume increased by 3.8% on an annual basis, according to calendar-adjusted data. The figures did not come as a surprise. Based on seasonally and calendar-adjusted data, the volume increased by 0.4% on a monthly basis in the second month of the year.
As for the detailed breakdown, sales volume adjusted for calendar effects increased by 2.2% in food and food-type mixed stores, 5% in non-food retail, and 6.4% in fuel retail compared to February 2025.
“Based on the long time series, it is still clear that retail sales are gradually, but moderately, expanding,” Erste Bank analyst János Nagy wrote in a note. “In parallel with the further increase in budgetary welfare expenditures and the expected continued positive trend in real wages, store sales may gradually increase further this year.”
Spending may also be supported by the slowdown in inflation observed at the beginning of the year. Overall, it appears that household consumption growth remains the most important support for GDP expansion this year. Industrial production data for February was also released on April 8, but here the news was less welcome.
“According to KSH, the volume of industrial production in February 2026, adjusted for working-day effects, decreased by 1.5% compared to the same period of the previous year, falling short of both our expectations and the consensus. On a monthly basis, output declined significantly, by 1.8%, erasing the improvement seen in January,” Nagy said.
KSH will publish more detailed data on April 15. So far, only the usual brief commentary has been released, indicating that production volume decreased in most manufacturing subsectors compared to February 2025. Among the most important subsectors, the production of computers, electronics, optical products, and electrical equipment expanded, while the production of vehicles and food, beverages, and tobacco products declined.
Uncertainty in the outlook is still driven by the lack of clear signs of real improvement in the German economy, Hungary’s most important single trade partner, Nagy notes. Rising energy prices resulting from the Iran war also pose a significant downside risk.
“All in all, we can still count on the impact of previous large investments: the capacities of BMW, BYD, CATL, and Mercedes should lead to an expansion in industrial production, mostly expected in the second half of 2026. Given the data from the first two months, consumption remains the only stable pillar of improving economic activity. The manufacturing industry is still unable to deliver balanced performance,” he said.
Inflation data for March was also released. According to KSH, consumer prices increased by only 0.4% on a monthly basis, pushing annual inflation up to 1.8% from 1.4% in February.
“The figure was lower than our expectation of 2.1% and the consensus of 2.2%. It is also encouraging that the annual core inflation index decreased further, from 2.1% in February to 1.9%,” Nagy commented on the new data.
According to him, the structure of inflation did not bring any major surprises. Food prices decreased by an average of 0.1%, while service prices increased by 0.2%. Household energy prices remained unchanged; within this category, district heating prices increased by 18.4%, while piped gas prices decreased by 3.3%. Prices of alcoholic beverages and tobacco products rose by 0.2%. Motor fuel prices increased by 4.6% while clothing prices rose by 1.9%.
As for the outlook, the Iran war, the blockade of the Strait of Hormuz, and the uncertainty surrounding its potential resolution have introduced significant risks into forecasts. Market tensions over the past month-and-a-half have led to a surge in energy prices and a notable weakening of the forint.
“We saw a significant recovery in the days following Easter, but strong market volatility does not support the reduction of inflation expectations. Official interventions are masking pent-up price pressures in the system, although the deterioration in labor market indicators may partly offset this effect,” Nagy noted.
“Global inflation, driven by the conflict in the Middle East, will gradually reach Hungary in the coming months. At present, we expect inflation to be around 5% in the second half of the year. At the same time, given the favorable figures at the beginning of the year, the average annual inflation rate may remain below 4%,” the Erste Bank analyst said.
March data shows that prices are still under control. The effects of the Iran war are currently most visible in fuel prices, although the price cap has dampened these. The March inflation figure remains below the 2–4% tolerance band of the National Bank of Hungary (MNB), so lower-than-expected price growth could pave the way for another interest rate cut in the near future.
For now, the conditional two-week ceasefire announced on the morning of Wednesday, April 8, in connection with the Middle East conflict remains fragile. However, if the current favorable international sentiment persists until the end of April, the MNB may consider a further easing following the February rate cut. This will also depend on how the longer-term effects of the month-long war on consumer prices unfold, according to the leading economic news portal, Portfolio.
This article was first published in the Budapest Business Journal print issue of April 10, 2026.
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