The latest data on inflation released by the Hungarian Central Statistical Office (KSH) show that although the effect of lower oil prices has slightly weakened, it is still a major factor behind prices. The drop in oil prices cut the year-on-year inflation figure by 1.5 percentage points, including ripple effects on production costs.

The latest data confirm that the Hungarian economy has been characterized by subdued inflationary processes. Weak price dynamics have several positive effects also in the short term. The value of wages and pensions is not diminished by rising prices; therefore the value of the disposable income of households is preserved. This leads to an upturn of consumption and economic growth. Practically it means that thanks to lower oil prices, consumers spend a smaller share of their income on purchasing fuels and a larger one on other items and their saving rate rises.

As a whole, in January-October 2015 consumer prices fell by 0.2 percent year-on-year, and for the whole year the inflation rate is expected to be around 0 percent, in line with the forecast of the Ministry for National Economy. Falling inflation rates since 2010 prove that Hungarian reforms are working.

(Ministry for National Economy)