Hungary has in recent years been characterized by subdued inflation. For 2016, data by the Hungarian Central Statistical Office show that the rate of inflation was 0.4 percent, in line with the Government’s estimate published in the Convergence Programme of April 2016.

Low inflation helps preserve the value of wages and pensions, which factor in turn drives consumption and economic growth. In December 2016, consumer prices rose by 1.8 percent year-on-year.

Recent data signal that muted inflation persists within the Hungarian economy. In the past six years, inflation has averaged 2.4 percent per year in Hungary, albeit there were major fluctuations. While in 2010 prices increased by some 5 percent, the multiple cuts of public utility prices reduced the rate to 1.7 percent in 2013, and since 2014 the indicator has been around 0 percent.

In 2017, the reduction of VAT on poultry, eggs, milk, internet and restaurant meals is expected to lead to significantly lower consumer prices. On the other hand, international energy market trends are pointing to higher inflation. The combined effect of factors is seen to result in subdued inflation this year: the Ministry for National Economy prognosticates an inflation rate of 1.6 percent for the year 2017.

(Ministry for National Economy)