April inflation in Hungary at 24 percent, while energy prices 40 percent higher than a year ago

In April this year, consumer prices in Hungary were on average 24% higher than a year earlier. Over the past year, household energy and food prices have risen the most. In the last month, consumer prices rose by 0.7 percent on average, the Central Statistical Office (KSH) said on Wednesday.

Our money lost a third of its value in two years

This means that for the first time in three months, the rate of money depreciation in Hungary is below 25 percent again, but it still remains the highest in Europe. The fact that price growth is slowing only slightly is worrying because the base figure, the annual inflation rate in April last year, was already 9.5 percent – meaning that consumer prices have risen by 35.8 percent in two years. This also means that, in a two-year comparison, there has been no improvement in inflation from March to April: consumer prices rose by 25.2 percent in March this year, which, combined with 8.5 percent in March last year, also means a rise of 35.8 percent.

The rise in food prices is even more shockiing. In April this year, food inflation was 37.9 percent, and if we add to that the 15.6 percent increase from April last year, we see that over two years, food prices have risen by 59.4 percent.

According to KSH data, the price of each of the so-called main product groups developed as follows:

• Food prices increased by 37.9 percent, with the most significant increases being recorded for dairy products (63.5 percent), butter and butter cream (62.1 percent), confectionery flour (61.9 percent), bread (61.6 percent), eggs (51 percent), dry pasta (47.6 percent), bakery products (46.7 percent), cheese (45.4 percent) and milk (43.2 percent). Flour (8.8 percent) and cooking oil (3.4 per cent) increased the least.
• The price of household energy rose by 41.8 percent. This includes an increase of 59.4 percent for piped gas, 54.4 percent for firewood, 46.9 percent for cylinder gas and 27.3 percent for electricity.
• The price of spirits and tobacco went up by 20.5 percent on average, with spirits up by 27.5 percent.
• Durable consumer goods cost 9.3 percent more, including an 18 percent increase for new cars, 16.1 percent for kitchen and other furniture, 15.7 percent for heating and cooking equipment and 15.2 percent for household furniture. Pet food was 59.1 percent more expensive, while washing and cleaning products went up by 39.8 percent, personal care articles by 28.3 percent, and home repair and maintenance products by 20.7 percent. The price of automotive fuel rose by 26 percent.
• The cost of services was 14.1 percent higher, including taxis by 36.2 percent, domestic holidays by 28 percent, sports and museum admissions by 27.9 percent, tolls, car rental and parking by 27.6 percent, vehicle repair and maintenance by 23.4 percent and home repairs and maintenance went up 20 percent.

Inflation was 0.7 percent month-on-month, with food prices unchanged and household energy down by 0.8 percent – but services were up by 1.7 percent. The price of domestic holidays rose quite sharply, by 4.9 percent.

The high base is causing a slowdown

Just like it did in most parts of the world, inflation in Hungary started in mid-2021 and rose steadily until January this year. Then it peaked at 25.7 percent on an annual basis, followed by 25.4 percent in February and 25.2 percent in March. The moderation was mainly due to a higher baseline (or benchmark), a fall in household energy prices and the halt in food price increase.

Price increases were fastest in the second half of last year, following the announcement of a restriction on unlimited residential utility price cuts in the summer and the end of the petrol price freeze in the autumn. However, according to the Hungarian Central Bank (MNB) and the state, this was not the only cause of the price rises, but the greedy price increases introduced by some companies, especially retailers. The national bank recently stated outright that a fifth of the increase in prices in the last quarter of last year had neither internal nor external causes, and was therefore largely due to companies' attempts to boost profits.

The government is now trying to prevent the latter through various means. To combat inflation, the price caps on certain food items have recently been extended, and shops have even been obliged to announce compulsory sales. The latter means that every week between June and September, the price of all products in a given product category must be reduced by at least ten percent.

The government's declared objective is to bring inflation down to single digits by the end of the year. In principle, this would not be a big achievement, as the rate of inflation was 24.5 percent last December, so it will now be measured against that. But analysts argue that in the current climate, reaching this target would still be a major feat.