MNB director: inflation is falling due to both external and internal processes

By: Trademagazin Date: 2023. 06. 23. 10:21

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The rates of price increases are decreasing on a global level, and in addition, internal demand and economic policy are also pointing in the direction of disinflation in Hungary, so inflation in the country may significantly drop below 10 percent towards the end of the year – confirmed András Balatoni, economic forecaster of the Hungarian National Bank (MNB). and Director of the Analysis Directorate at an online press conference presenting the central bank’s latest quarterly Inflation Report.

On Tuesday, the MNB already published the main figures of the report: it changed its annual inflation forecast for this year from the previous range of 15.0-19.5 percent to 16.5-18.5 percent, leaving unchanged the 0-1.5 percent 2023 GDP- growth forecast.
Based on the report, the MNB raised its inflation expectation for next year from 3.0-5.0 percent to 3.5-5.5 percent compared to its March forecast, and left its growth forecast at 3.5-4.5 percent.

The report predicts inflation of 2.5-3.5 percent by 2025, but economic growth of 3.0-4.0 percent, which is 0.5 basis points lower than the previous forecast.

The director recalled that inflation started to decrease in Hungary after the peak in January: in May, the consumer price index fell from 24 percent in April to 21.5 percent, and core inflation from 24.7 percent to 22.7 percent.
He pointed out that although inflation in Hungary is still higher compared to the Visegrad countries on an annual basis, a three-month comparison shows that the country’s inflationary surplus has already disappeared.

It is becoming more and more common that not only the price indices but also the prices decrease, this happened for 40 percent of the products of the entire consumer basket, typically for items affecting foreign trade, but at the same time, market services are still not characterized by a decrease, but rather an increase – he noted.