István Madár: Inflation would be higher without price caps

Seasonal effects balanced out prices

The unchanged inflation rate was also influenced by seasonal factors: falling prices of vegetables and fruits offset the increase in other food products, such as meat. “This is a typical summer pattern, which explains why the average level of food prices does not rise significantly at this time of year,” said István Madár.

On an annual basis, however, food prices still showed a significant 5.9 percent increase, which the expert said was also moderated by the price caps.

Artificially suppressed inflation

István Madár emphasized that inflation, kept artificially low by price caps, poses a risk to the economy. The National Bank of Hungary’s official target range is 3 percent ±1 percentage point, while the indicator has been moving between 4 and 5 percent for half a year, still above target.

Meanwhile, the government has actively intervened in the services sector as well, imposing price restrictions on insurers, banks, and telecommunications companies. Without these measures, inflation would actually be closer to 6 percent, the expert noted.