Inflation moderated to 16.4%, the introduction of the food price cap did not significantly affect it

In the rest of the year, we expect a sharp decrease in inflation due to base effects and the increasingly widespread price reductions announced for food products. The base effects can be reinforced by the fact that international raw material, product and energy prices and transport costs have fallen significantly, mostly to 2021 levels, in recent months, so we do not expect new external price shocks, and may even result in further price reductions, bringing the HUF back to last year’s levels and its relative strengthening may also accelerate the moderation of inflation, which can already be clearly observed in the case of consumer durables.

In September, last year’s surge in household energy prices falls out of the base, leading to a further sharp drop in inflation. On the other hand, the rise in fuel prices, the increase in the prices of gambling and some public transport fees in September, as well as the formation of the price-wage spiral observed in some service sectors may slow down the rate of inflation, however, we expect single-digit inflation from November, which may decrease to close to 6% by the end of the year. . Due to the increase in the price of fuels (which is largely caused by production cuts in some oil-producing countries, but other factors also contribute) and the slower-than-expected moderation in the rise in food prices, we are raising our average inflation expectation for this year from 17.5% to 17.8%, while next year’s inflation will be despite the fuel excise tax increase at the beginning of next year, it may decrease to 3.9%.