The Inflation Report puts average annual inflation at 1.8pc in 2026 and 2.3pc in 2027.

The recent deceleration in inflation reflected slower price rises of foods and industrial goods, supported by the disinflationary impact of the stronger forint.

The major product groups of the consumer basket were characterised by modest repricing.

Presenting the report, Andras Balatoni, an NBH director, noted that the central bank's inflation forecast is 2 percentage points lower for this year and 1.4 percentage point lower for 2027 compared to what it was in the March edition of the Inflation Report.

Balatoni said the inflation expectations of households has decreased markedly, which has not been the case in the recent period, just as the inflation expectations of businesses' have not been as low in the past six years as they are now.

Due to the easing of the Iran conflict, fuel market prices are falling below the level of fuel price caps, therefore, the phasing out of the price caps is not expected to have an impact on inflation, the report said.

The NBH puts GDP growth at 2.0pc in 2026, driven by household consumption, and 3.0pc in 2027. The spring increase in energy prices and geopolitical uncertainty are dampening growth on Hungary's export markets, however, the capacity-increasing investments of recent years will support industrial export growth, the report noted.

EU funds made available may give a boost to investment, with their positive impact on growth expected to materialise gradually, it added.

The NBH forecasts a modest 0.7pc-of-GDP current account deficit for 2026, as energy prices weigh, and augurs a 0.2pc deficit in 2027.

According to the NBH’s forecast, the budget deficit may increase to 6.5pc in 2026. Subsequently, partly owing to lower government interest expenses, the deficit may decline to 5.4pc in 2027 and to 4.7pc in 2028.

Gross public debt as a percentage of GDP may stagnate in 2026 and then decrease to a small degree in 2027 and 2028.

Photo: Pixabay

Source: MTI – Hungary’s national news agency since 1881.

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