Consumer prices are in line with the estimate of the Ministry for National Economy, and accordingly the Ministry continues to expect no significant inflation during the remainder of the year, in addition to which it is forecasting zero percent inflation and price stability for the year as a whole, Minister of State for Taxation and Financial Affairs Gábor Orbán said on Wednesday at a press conference in Budapest.

Mr. Orbán said that according to recent data published by the Hungarian Central Statistical Office (KSH), consumer prices in Hungary have increased slightly, by 0.6 percent, but this increase is barely noticeable in everyday life. Inflation re-entered the positive range in May, prior to which consumer prices had been decreasing for eight months in a row thanks to cuts in utility bills and the spiralling effects of low energy prices, the Minister of State added.

He recalled that for several years following 2002, inflation had remained at around 5-10 percent despite strenuous efforts, which – among others – resulted in a surge in foreign currency lending. The central bank’s efforts to maintain the fight against inflation through high interest rates resulted in imbalances between Hungarian and foreign interest rate levels, which also affected retail lending.

According to the Minister of State, high inflation was attributable to the fact that economic policy was not suitably disciplined and cost effective, resulting in the development of a continuous deficit within the Hungarian economy, a disruption in the external balance and progressively increasing government debt.

The other reason for high inflation was the undue and disproportionate increase in utility charges as a result of which water, electricity and gas prices in Hungary increased to a much greater extent than in other countries within the region. The correction of these factors has been realised over the past five years, the effects of which have also had an impact on inflation, Gábor Orbán pointed out.

(Ministry for National Economy)