According to figures from the Hungarian Central Statistical Office (KSH) cited by Világgazdaság, consumer prices were 2 per cent higher in October than a year earlier. They rose by 0.4 per cent compared with September, when annual inflation had stood at 1.6 per cent.
The Ministry of Finance has not substantially changed its forecast for average inflation this year. Finance Minister András Kármán said Hungary’s rate remained favourable by EU standards and attributed the October increase mainly to external developments in energy markets.
A mixed picture in food shops
Food prices were, on average, 1.1 per cent lower in October than a year earlier. Excluding catering services, the annual decline was 4.1 per cent. Month on month, however, food became 0.2 per cent more expensive.
The figures vary considerably between individual products. Potato prices rose by 1.9 per cent in one month and by 14 per cent over the year. Eggs became 1.6 per cent more expensive than in September, while fresh vegetables rose by 1.2 per cent. Cooking oil cost 6.2 per cent more than a year earlier.
The full impact of the drought may not yet be visible on shop labels. Crop losses and more expensive animal feed could filter through later, alongside higher costs in food processing. Rising feed costs may eventually affect the prices of meat, dairy products and eggs.
The extent to which shoppers feel these pressures will also depend on international crop prices, imports and competition between retailers. Experts cited by Világgazdaság said the disinflationary effect of the earlier strengthening of the forint may also be fading.
Higher tobacco tax and the future of margin caps
Excise duty on tobacco products increased in November. The effect on retail prices will depend on how much of the extra cost manufacturers and shops pass on to customers.
The combined category of alcoholic drinks and tobacco products was 3.2 per cent more expensive in October than a year earlier. That figure could not yet include the November tax rise. Orsolya Nyeste, chief analyst at Erste Bank, said the tax change, less favourable base effects and a gradual rise in food prices could all lift inflation in the final months of the year. Gábor Regős, chief economist at Gránit Alapkezelő, expects the tobacco tax to add several tenths of a percentage point, with the effect appearing gradually.
Another unresolved issue is the future of the margin caps covering food and drugstore products. Világgazdaság reported that Hungary’s Tisza government submitted legislation at the end of October to remove the restrictions. The government argued that inflation had normalised and the stronger forint had created favourable conditions for ending the measure.
Removing the caps would not automatically make every affected product more expensive. It would, however, eliminate a restriction that has directly limited price increases.
Views on the likely outcome differ. Olivér Horthay warned that the change could bring further price rises and strengthen the bargaining power of large retail chains. Deputy State Secretary Tamás Kozák took a different view, arguing that removal of the caps could encourage competition, create more scope for special offers and benefit consumers over the longer term. Regős said the precise effect on inflation was difficult to predict and that a new price level would probably develop gradually.
Any rise in the cost of staple foods could weigh more heavily on lower-income households, which spend a larger share of their budgets on these products.
ING expects inflation to accelerate in 2027
ING analysts Péter Virovácz and Zoltán Homolya expect inflation to reach 3 per cent by the end of the year and approach 4 per cent in July 2027. The bank forecasts average inflation of 1.9 per cent for 2026 and 3.4 per cent for 2027.
Their analysis does not currently point to a general repricing wave. Companies have been more restrained than before in passing higher costs on to customers, though that could change in early 2027.
Many businesses renew their energy supply contracts towards the end of the year or at the beginning of the next one. Higher gas and electricity prices may therefore feed into production costs with a delay. If this coincides with the effects of drought and the end of retail margin restrictions, households could encounter price pressure from several directions at the checkout.
Source: Világgazdaság
