Hungary Inflation Falls to 16.4% in August

The CPI fell for the seventh month in a row after peaking at 25.7% in January.

Food prices rose 19.5% in August, decelerating from a 23.1% increase in the previous month. The price of bakery products was up 20.1% and the price of sugar climbed 67.9%, while flour prices dropped 10.4%.

The government earlier rolled back prices for a number of staples, including pork, cooking oil, and flour, in an effort to dampen inflation. Those price caps expired after August 1.

Household energy prices increased 34.7%. Gas prices rose 47.1% and electricity prices climbed 25.3%.

The data show consumer durable prices increased 2.3%.

Prices in the category of goods that includes vehicle fuel rose 19.8%. Motor fuel prices, which were capped for households until early December, increased 31.1%.

Prices of spirits and tobacco products increased 12.7% and clothing prices rose 6.9%. Service prices increased 13.2%, slowing from a 14.6% rise in July.

The harmonized CPI, adjusted for better comparison with other European Union member states, was 14.2%.

Core inflation, which excludes volatile fuel and food prices, was 15.2%.

The CPI calculated with a basket of goods and services used by pensioners was 17.2%.

In a month-on-month comparison, consumer prices edged up 0.7%.

Nagy Augurs Single-Digit Inflation in Late 2023

Commenting on the inflation data, Economic Development Minister Márton Nagy called the drop in food price inflation to under 20% - from a peak of 44.8% in December - a "significant milestone" and noted the impact of government-mandated discounts on a range of food products at big supermarket chains as well as an online price-monitoring platform.

The drop in food price inflation should support a recovery of consumption, he added.

Nagy acknowledged that headline inflation was close to 0.4 percentage points higher than the government's expectation and attributed the difference to higher vehicle fuel prices. He said that crude production cuts in Russia and Saudi Arabia had raised global vehicle fuel prices, while the narrower Urals/Brent spread and higher transit fees were negative factors specific to Hungary. He noted that Hungarian oil and gas company MOL was paying three to five times the market average for crude delivery because of the increase in transit fees for using pipelines running through Ukraine and Croatia.

The government target to bring inflation down to the single digits by year-end will be achieved, but that threshold will not be crossed in October, Nagy said. 

Late in August, Nagy had said CPI could reach 9-10% in October.