VG.hu: the decline in food inflation may have continued in June

The decrease in prices is also encouraged by the decline in consumption, which forces traders to maintain their turnover with lower prices. The decrease in inflation is expected to be due to the development of fuel and energy prices, as well as food prices. The core inflation indicator, which measures price pressure in the economy, also decreased from 22.8 percent in May to 21.2 percent. Base effects, the stable forint and weak domestic demand also contribute to the moderation of inflation. The introduction of mandatory promotions can also reduce inflation to a small extent. The Central Statistical Office will publish the latest inflation data on Friday.

The decline in consumption encourages traders to maintain their turnover with lower prices. In May, retail sales fell by 13.6 percent, which is the biggest drop since the start of the countdown. According to ING Bank analyst Péter Virovácz, food price changes continue to play a significant role in the nearly 20 percent inflation rate. No further general price reductions are expected, so the monthly inflation indicator will return to the positive range.

“The two main reasons for this are the development of fuel prices, which were hardly able to pull price dynamics down on a monthly basis, and the inflation of services. In the case of the latter, the impact of seasonal price changes could be significant, so in addition to the many braking forces, this could be more seriously compensated. Overall, I expect a monthly inflation of 0.2 percent, which means that although the price increase will still be in double digits, it may start with one.”

– said the specialist to vg.hu.