The rate of inflation grew year-on-year by 0.3 percent in February 2016, which – thanks to lower fuel prices – was well below the 0.9 percent figure registered last month. The Hungarian economy has been characterized by subdued inflation; thus incomes can preserve their value and stable prices make it easier for enterprises to draw up future plans.

Inflation has remained modest, thanks to low oil prices and the knock-on effect of disinflation in Europe. As far as domestic processes are concerned, the price pressure resulting from demand growth has hitherto remained subdued, while the reduction of VAT on pork, for example, was a measure that helped cut inflation in January.

Month-on-month, consumer prices edged down by 0.1 percent, as the relatively large drop in fuel prices has been counterbalanced by the seasonal rise in food prices. The price of pork continued to fall in February: this product category saw a price drop of 16.3 percent in the past two months, which indicates that pork prices have changed in a way that now they fully reflect the reduction of VAT in January.

While consumer prices had risen by some 5 percent in 2010, thanks to the gradual reduction of public utility prices this indicator showed growth of only 1.7 percent in 2013 and about 0 percent in 2014 and 2015. Accordingly, the forint’s purchasing value could be preserved. Falling inflation helps increase the value of wages and pension benefits in real terms, and thus the amount of households’ disposable income also rises which in turn leads to consumption and economic growth.

(Ministry for National Economy)