The population’s ability to pay improved slightly due to falling inflation

By: Trademagazin Date: 2023. 10. 24. 13:10

The solvency of Hungarian households increased slightly compared to the previous quarter, which was primarily due to falling inflation, according to the new solvency report of Intrum and GKI. However, no significant improvement in the financial situation of the population is expected in the near future, several signs point to the fact that the cost of living will remain high or even rise in the coming months.

A közeljövőben azonban nem várható jelentős javulás a lakosság pénzügyi helyzetében

In the third quarter of 2023, the slight increase in the solvency of Hungarian households continued, based on research by Intrum and GKI. The Intrum Solvency Index (IFI) stood at 6.51 in the first quarter, 11.6 in the second, and 12.99 on average in the third. Since the beginning of the year, the financial situation of the population has improved slightly, but in annual comparison we still see a significant decrease, since the value of the index decreased by 70 percent compared to the same period of the previous year. The third quarter value is still one of the lowest in the last 10 years, the last time solvency was at a similar level around 2014-15.

The main reason for the improvement seen since the beginning of this year is the decrease in inflation: the peak of price increases was in January 2023, when the central bank reported inflation of 25.7 percent, which was the highest in the entire EU. Due to the base effect and world economic trends (inflation is decreasing worldwide as economies recover from the shock after the COVID epidemic and the Russian-Ukrainian war), domestic price indices also started to decrease, but at the same time, existing geopolitical risks (for example, the situation in the Middle East) because of this, international analysts do not expect a quick recovery of price stability. For example, the EU’s inflation target this year is still the high 5.9 percent.