Inflation has accelerated

In June, inflation looking back over the past twelve months was 4.6 percent, and prices increased by 0.1 percent on a monthly basis. According to Dávid Németh, the chief analyst at K&H, this is a minor surprise, as a more moderate increase of 4.5 percent on an annual basis could have been expected. The expert said that June is already the second month in which the annual rate of price increase has accelerated, as the 4.2 percent in April was followed by the 4.4 percent in May and the current 4.6 percent increase in June.

Fruits, jewelry, restaurant meals

Commenting on the detailed data, the analyst said that the most exciting thing in terms of inflation was the development of prices of products available in drugstores, since the margin freeze came into effect this month. “The prices of products belonging to the three main groups, namely household consumables, detergents and cleaning products, and personal care products, decreased by 2.3-5.9 percent on a monthly basis, but we expected a greater impact,” said Dávid Németh.

He added that the increase in inflation was partly due to food, which became more expensive by 6.2 percent compared to June last year, and by 0.1 percent compared to May. This can be explained primarily by the increase in seasonal foods, within which the price of fruits and vegetables increased by almost 10 percent compared to June last year. He highlighted that the monthly 0.4 percent increase in prices of durable goods is primarily due to motorcycles and jewelry, the former increasing in price by more than 6 percent and the latter by 1.7 percent in June compared to the previous month. Jewelry has been showing a steady price increase for a long time: it has increased in price by an average of 1.3 percent every month since August 2023. This can also be partly explained by the marked increase in the price of gold. In areas belonging to the so-called horeca (Hotels, Restaurants, Cafés) business sector, an accelerating price increase is visible in the first half of the year, for example, restaurant meals increased in price by 4.7 percent in the first half of last year, while this year by 5.4 percent. Furthermore, in the case of domestic holidays, the 11.7 percent price increase recorded in the first six months of last year was followed by a 12.7 percent increase this year.

The expert also said that core inflation, similarly to previous months, developed favorably in June, as it slowed to 4.4 percent from 4.8 percent in May.

What are the prospects?

Regarding inflation expected in the coming period, the expert said that annual inflation could be between 4 and 4.5 percent by November, but in December, due to the high base, the indicator could dip below 4 percent. An annual average rate of 4.4 percent is expected, followed by a value of around 4 percent next year.