The Energy Price Inflation and Its Effect on Hungary

A new twenty-year record was marked for inflation in Hungary this past November when it reached 22.5%. Energy and food were the most expensive, as they have been for the past several months. The figure doesn’t consider the fuel price cap removal, which won’t be evident until January. There is some speculation that the inflation could continue over the next few months.

Latest Inflation Numbers

Of all the inflation costs over the past year, household operation and food have been the most difficult to manage. This is because everyone must buy food.

Food prices have been significantly affected by inflation over the past couple of years. In fact, prices are overall 43.8% higher across the board. Eggs, bread, and dairy products were affected the most, with pasta, sugar, and poultry following at more than 54.4% inflation.

Household energy has increased by more than 65% and firewood is up more than 60% as well.

Food Costs Rise Disproportionately in Hungary

The rising prices of energy and the loss of production because of the Ukraine war are considered two significant causes of food inflation. The drought is also affecting food prices.

There are several reasons that food costs are rising so much in Hungary. First, the forint has depreciated. Price caps have also significantly affected food prices. The Hungarian food industry is also in low production.

Retailers are also being affected by the rising prices. This rise in prices is affecting many and charities are reporting an increase in people in need.

When Does It End

The world saw an increase in inflation starting in 2021 due to the pandemic closures. There were also shortages of many products across the globe. This caused prices to shoot up for commodities, energy, and products. Global supply chains were faltering and interrupted. Add to that the war between Ukraine and Russia. Energy supplies were further disrupted, and inflation skyrocketed.

The Hungarian government seeks to reduce inflation through market interventions such as reducing utilities, a fuel price cap, and a cap on specific food types. There is debate on how this will further impact the Hungarian economy. Currently, the Hungarian inflation rate is the 4^th highest in Europe. The Baltic states are the only ones that outrank it when it comes to cost of goods.

Hungarian citizens are looking to the Central Bank, or the Hungarian National Bank, to help curb inflation. The first step was last year’s increase in interest rates. The financial institution is expected to introduce other implements to reduce the inflation rate in the country.

Sources:

Telex: Inflation in Hungary at record high 22.5% in November