ING economists Peter Virovacz and Zoltán Homolya be aware that Hungarian inflation fell to 1.4% year-on-year in February 2026, under consensus and their very own optimistic forecast. Core inflation dropped to 2.1%, however rising power prices, gasoline costs and a weaker Forint threaten this benign image. They see inflation rebounding above 3% by mid-year and in the direction of 4% by year-end, averaging round 3% in 2026.
Low CPI challenges fee lower prospects
“Inflation in Hungary got here even decrease than essentially the most optimistic forecast. The bottom impact and the constructive development in month-to-month repricing pushed the headline quantity to a degree not seen in 10 years. Nonetheless, this will not be sufficient to maintain the rate-cutting door open.”
“The core inflation fee, adjusted for unstable objects, additionally developed extraordinarily favourably, falling to 2.1% on an annual foundation. The headline inflation fee was final this low in 2016, whereas core inflation was this low in 2018. The figures present that the most recent power worth shock, attributable to the outbreak of struggle within the Center East, couldn’t have come at a worse time.”
“With inflation indicators like these, family inflation expectations may have lastly began to say no considerably. On the similar time, rising gasoline costs (despite the fact that an official worth cap has been launched) and growing power prices are placing additional strain on costs. Moreover, the weakening of the forint is just not serving to inflation expectations both.”
“In keeping with our newest flash estimate, the year-on-year inflation fee may rise above 3% once more by the tip of the primary half of the yr, reaching 4% by the tip of the yr. Whereas the timing is unlucky when it comes to inflation expectations, the shock has come on the ‘finest’ time when it comes to the year-on-year inflation print. In essence, inflation can now begin to rise from a 10-year low.”
“Due to this fact, if provide disruptions ease and markets settle down within the coming weeks, there’s a actual probability that inflation will common 3% for the yr as an entire.”
(This text was created with the assistance of an Synthetic Intelligence device and reviewed by an editor.)
