ING’s Peter Virovacz notes that Hungary’s inflation accelerated in April but remained a positive surprise versus expectations, with headline Consumer Price Index (CPI) at 2.1% year-on-year and 0.4% month-on-month. Core inflation and other underlying measures still look favourable, suggesting second‑round effects are limited. ING’s base case sees inflation rising toward 4.0–4.5% by year-end, averaging around 3.0–3.5% in 2026, with significant upside risks from geopolitics and energy.

Inflation outlook and policy implications

"According to the latest data released by the Hungarian Central Statistical Office (HSCO), inflation in April accelerated further, clearly steering away from the decade-low level seen in February. Still, the latest print is a clear positive surprise, as it implies somewhat less price pressure than market consensus had feared. Consumer prices were 2.1% higher year-on-year, while the average price level rose by 0.4% month-on-month."

"The core inflation rate, which is adjusted for volatile items including changes in fuel prices, still looks good. This suggests that second-round effects are not yet widespread. The acceleration to 2.2% year-on-year is not a figure that should cause concern."

"Our latest quick estimate suggests that year-on-year inflation could rise to around 3% in the summer and reach 4.0–4.5% by the end of the year, according to our base case scenario. Therefore, although inflation is rising from a decade-low starting point, the pace of acceleration is still fairly contained. This leaves room for headline inflation to average around 3.0–3.5% in 2026."

"In this highly uncertain environment, it is unlikely that today's inflation data will materially shift the stance of monetary policymakers in the near term. That said, we would not rule out a rate cut or a rate hike later this year; the direction will depend on how the geopolitical situation evolves and whether the Hungarian forint can strengthen significantly. According to our base case scenario, we expect the base rate to remain at 6.25% throughout the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)