"In the medium term, with buoyant consumer demand, volatile commodity market movements and persistently strong wage dynamics point to an acceleration in underlying inflation," the central bank's policy makers said in a summary of the Inflation Report.
 

The report shows inflation is expected to remain above the NBH's 3.0pc +/-1.0pc tolerance band for the rest of 2025, before declining "persistently" to the band in early 2023 and reaching the 3.0pc target in early 2027.

The report forecasts average annual inflation of 4.7pc for 2025, 3.7pc for 2026 and 3.0pc for 2027.

The report noted "vigorous" growth in household consumption paired with a prolonged decline in investments in Q1, with exports restricted by the uncertain global market environment, but augured a gradual recovery in the second half of the year, supported by growth in consumption, a slowly normalising external economy and base effects.

The forecast for GDP growth in 2025 was lowered to 0.8pc. GDP could grow by 2.8pc in 2026 and by 3.2pc in 2027.

Strong consumption dynamics will remain "an important factor" of growth over the entire forecast horizon, supported both by rising real wages and government tax reductions, the report said.

Andras Balatoni, an NBH director, highlighted significant external changes since the previous Inflation Report, including the tariff war and escalating geopolitical tensions that had fed into commodities prices.

He added that the forecast for external demand had been lowered, but said fiscal stimulus in the European Union and especially Germany would start to counter the impact of tariff increases.

Balatoni said that mandatory and voluntary price restrictions in force at present affected 16pc of the goods and services in the consumer basket and would shave 0.8pc off headline inflation for the full year. The restrictions could reduce headline CPI by around 1.5pc during the summer months, he added.

 

Source: MTI – Hungary’s national news agency since 1881. While MTI articles are usually factual, some may contain political bias, and readers should be aware that such content does not reflect the position of XpatLoop, which is neutral and independent.

Since the goal of XpatLoop is to keep readers well briefed, right across the spectrum of opinions, MTI items are shared to ensure readers are aware of all narratives within the local media.

XpatLoop believes in empowering readers to form their own views through complete and comprehensive coverage. To facilitate this XpatLoop has a balanced range of news partners, as you can see when you surf around XpatLoop.com

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