Hungary: Inflation increases to over one-year high in January
Latest reading: Inflation rose to 5.5% in January from December’s 4.6%. January’s result was the highest since December 2023 and surprised markets sharply to the upside. Looking at the details of the release, prices for food, housing and utilities, recreation, hospitality and transport increased at sharper rates compared to the prior month.
The trend pointed up slightly, with annual average inflation coming in at 3.8% in January (December: 3.7%). Meanwhile, core inflation rose to 5.8% in January from December’s 4.7%.
Finally, consumer prices increased 1.54% in January over the previous month, picking up from December’s 0.53% rise. January’s jump was the highest reading since January 2023.
Panelist insight: ING analysts Peter Virovacz and Kinga Havasi commented:
“Hungary’s inflation reading for January was an extraordinary and unpleasant surprise. […] The technical effect of the latest January data has raised our forecast for average inflation in 2025 to above 5%. […] This also means that the rate of increase is unlikely to return to the central bank’s inflation target range. All these developments also suggest that the National Bank of Hungary may have little room for maneuver to cut interest rates this year. Unless this year’s economic performance is shockingly weak, which is becoming more likely in this inflationary environment, the central bank will probably have to keep the key interest rate unchanged at 6.50% throughout the year.”