Inflation in Hungary – what to expect in 2023
Are you running a business in Hungary? Get familiar with the latest statistics and projections regarding GDP and inflation in Hungary in 2022 and 2023 based on the latest data.
Latest data available
The Hungarian Central Statistical Office (Központi Statisztikai Hivatal, KSH) has recently published their data about inflation in Hungary in 2022. Analysts have already started cracking down on their data, making summaries and projections for 2023.
Inflation in Hungary in 2022
Inflation in Hungary throughout 2022 was around 14.5% overall. However, this is just the average for every consumer price, including both goods and services. If we take a closer look, we can see that prices for some items increased more drastically:
- 55.5% for electricity, gas, and other fuels
- 45% for foodstuff in general
- above 80% for bread, eggs, cheese, and various other dairy products
- 13.6% for durable goods
- 24.1% for cars
- above 20% for cooking and heating equipment
- around 20% for other furniture
The prices for services increased too, although significantly less, around 9.5% in general. This might be due to how service providers might be afraid to increase prices and lose business altogether because of the decreasing purchase power of salaries. Some services sectors still saw more increase than others:
- 30% for taxis
- around 23% for the repair and maintenance of dwellings and vehicles
- 22% for public entertainment tickets
- above 20% for recreation in the country
- almost 18% for personal care services
Expectations for inflation in 2023
Analysts expect inflation in 2023 to be highest during Q1, but also to remain above 20% throughout H1. Inflation in Hungary may decrease over H2, and shrink to 10% by the end of 2023. In line with this, Equilibrium Institute (Egyensúly Intézet) expects 2023 inflation around 17.5% for the year.
GDP and economics
September forecasts expected a GDP increase of 4.4% for 2022 and 1.1% for 2023. In light of year end data, GDP increase is said to be around 5% in 2022, and expected around 0.1% in 2023. This seems an anomaly as GDP growth in Q1-Q3 2022 was more or less steady, while Q4 saw an obvious decrease due to higher inflation and the steep increase of energy prices. At the same time, the economic stagnation forecasted for 2023 would not be unique to Hungary, but likely in Europe in general.
Economic forecast for 2023
In 2023, production for export might be the best way to turn a profit and increase the GDP. Price caps cause uncertainty for domestic production, especially in the agricultural sector, which might lead to decrease in production. The processing industry is less prone to domestic risks, since it mostly creates products for foreign markets, but as a result it is dependent on foreign trends. The construction sector might see a decrease in demand with the slowdown of government projects, which might free up resources for construction projects based on foreign investment. For now, there is no definitive forecast available for energy prices, even though they may have an impact on every other sector.
With regard to the labor market, tourism may see more downsizing, as service industries in general might see a reduction of traffic as real salaries decrease with inflation. At the same time, export-oriented sectors may see an increase in labor demand. As a result, the unemployment rate is not expected to become too high.
Foreign exchange rates are expected to stabilize over 2023. EUR is expected to remain around HUF 400 throughout the year, with a HUF 410 average at most.
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