{"id":17847,"date":"2026-05-09T08:28:34","date_gmt":"2026-05-09T06:28:34","guid":{"rendered":"https:\/\/mkt.hu\/?p=17847"},"modified":"2026-05-14T13:36:37","modified_gmt":"2026-05-14T11:36:37","slug":"dezinflacio-vagy-elfojtott-aremelkedes","status":"publish","type":"post","link":"https:\/\/mkt.hu\/en\/2026\/05\/09\/dezinflacio-vagy-elfojtott-aremelkedes\/","title":{"rendered":"Disinflation or Suppressed Price Increases?"},"content":{"rendered":"<p><strong>The Department of Economic Policy and Economic Theory of the Hungarian Economic Association convened leading representatives of the domestic analytical community for a roundtable discussion. During the ninety-minute debate, participants discussed the level of inflation, the sustainability of price controls, the exchange rate of the forint, and the possible direction of central bank interest-rate policy.<\/strong><\/p>\n\n\n\n<p>Three years after the previous inflation roundtable, the Department of Economic Policy and Economic Theory of the Hungarian Economic Association once again gathered its experts. President P\u00e9ter Halmai described the timeliness of the event by noting that although Hungary\u2019s inflation rate had fallen spectacularly from a European peak \u2014 where it had even reached a maximum of 25.6 percent \u2014 the governor of the Hungarian National Bank still projected year-end price growth of as much as 5 percent during the very week of the meeting. The tension therefore remains.<\/p>\n\n\n\n<p>The very first question of the debate was intentionally provocative: \u201cIs there inflation at all, or isn\u2019t there?\u201d asked editor-in-chief Zolt\u00e1n Farkas. According to the statistics, the consumer price index stood at 1.8 percent, which formally already appears close to price stability. On store shelves, however, the picture is different: the prices of certain products suddenly and unexpectedly jump, while retailers simultaneously advertise competing price-reduction campaigns.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Infl\u00e1ci\u00f3s kerekasztal\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/9xZ4YhEpKHI?feature=oembed\"  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Gergely Tardos, analyst at OTP Bank, approached the issue through the so-called \u201csupertrend indicator\u201d: core inflation calculated after excluding food, fuel, and indirect tax changes currently fluctuates around 2\u20132.7 percent. P\u00e9ter Quittner from the Hungarian National Bank confirmed that one of the key assumptions behind their 3.8 percent annual forecast had been that margin caps and protected prices would be phased out around May \u2014 an assumption that has since changed after the regulations became indefinite in duration.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cBased on just a few months of data, it would be far too early to declare victory over inflation.\u201d<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\">The Question of Suppressed Inflation<\/h2>\n\n\n\n<p>According to the experts, at least three types of government intervention are simultaneously at work behind the low statistical figure: food retail margin caps, protected fuel prices, and regulated utility prices. P\u00e9ter Quittner stated that according to the MNB\u2019s estimates, the inflation-reducing effect of margin caps amounted to roughly one and a half percentage points when introduced, but by now \u2014 due to declining producer and import prices, as well as corporate adaptation \u2014 the effect has diminished.<\/p>\n\n\n\n<p>Several participants recalled the lessons of the 2022 fuel price cap: controlled prices increased consumption by one-fifth, while abolishing the cap reduced it by almost the same amount. Regarding food price caps, \u00c9va Pal\u00f3cz (Kopint-T\u00e1rki) argued that the optimal timing for phasing them out would have been at the trough of agricultural producer prices \u2014 in her view, mid-summer would have been desirable, and the temporary impact on the annual price index would have amounted to 0.5\u20130.6 percentage points.<\/p>\n\n\n\n<p>There was complete consensus regarding utility prices: most likely, even the next government will not touch household energy prices, because doing so would amount to political suicide. By contrast, \u00c9va Pal\u00f3cz questioned the legitimacy of protected fuel prices: SUVs consuming 15 liters per 100 kilometers receive the same benefit as fuel-efficient vehicles \u2014 something that is neither socially justifiable nor compatible with climate-protection considerations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">MAIN FINDINGS OF THE ROUNDTABLE<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Measured inflation:<\/strong> 1.8% (KSH), but market-based, filtered core inflation is estimated at around 2\u20132.7%.<\/li>\n\n\n\n<li><strong>Inflation expectations:<\/strong> Inflation perceived by households remains stuck around 5\u20136%; this is a worrying signal for monetary policy.<\/li>\n\n\n\n<li><strong>Forint exchange rate:<\/strong> Analysts see the equilibrium level in the 353\u2013375 HUF\/EUR range; the strong forint is the main brake on inflation.<\/li>\n\n\n\n<li><strong>Price caps and protected prices:<\/strong> One-third of the consumer basket is under some form of official regulation \u2014 this already violates the normal logic of economic functioning.<\/li>\n\n\n\n<li><strong>VAT and special taxes:<\/strong> Behind the nominally \u201cworld champion\u201d 27% VAT rate lie numerous discounts and exemptions; the effective tax rate is not outstanding in European comparison.<\/li>\n\n\n\n<li><strong>Base-rate outlook:<\/strong> According to the consensus, the next move will be a cut; by the end of 2027, a level below 5% is realistic if fiscal policy and the ERM2 path remain consistent.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">VAT and Special Taxes<\/h2>\n\n\n\n<p>The frequently cited \u201cEuropean record\u201d 27 percent value-added tax rate requires a more nuanced interpretation, P\u00e9ter Quittner pointed out. If one calculates the effective average VAT burden corrected for discounts and exemptions, the Hungarian figure comes to around 14 percent, which is no longer exceptional within the EU. \u00c9va Pal\u00f3cz added that the retail special tax, by contrast, is a genuine price-increasing factor: it generates annual budget revenue of 320 billion forints.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-spotify wp-block-embed-spotify wp-embed-aspect-21-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe title=\"Spotify Embed: Infl\u00e1ci\u00f3s kerekasztal\" style=\"border-radius: 12px\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen allow=\"autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture\" loading=\"lazy\" src=\"https:\/\/open.spotify.com\/embed\/episode\/2DHopaYbdAmJdskuamEkXn?si=2b12cfd5001d4609&amp;utm_source=oembed\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Opinions were divided regarding the effectiveness of VAT reductions. The well-known asymmetry \u2014 whereby price increases are immediate after tax hikes, while the pass-through of reductions is extremely slow \u2014 has proven real based on previous experience. At the same time, when internet VAT was reduced, the discount immediately appeared on January bills, although the durability of the price reduction remains questionable. The relationship is therefore dependent on competition and sector-specific factors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Forint and the Exchange-Rate Turnaround<\/h2>\n\n\n\n<p>Analysts unanimously consider the dramatic strengthening of the forint \u2014 10 percent within a short period \u2014 to be the most important factor behind low inflation. Gergely Tardos highlighted the paradigm shift in the MNB\u2019s exchange-rate policy: the central bank replaced the decades-long practice of depreciation with a stable, and at times even strengthening, exchange-rate path. For a long time, the forint had been the only currency in the region weakening even in nominal terms.<\/p>\n\n\n\n<p>Exchange-rate forecasts ranged between 353 and 380 HUF\/EUR. According to Zsolt Becsey, the current exchange rate does not differ dramatically from equilibrium value, and the credibility of intentions to introduce the euro could permanently reduce the risk premium. Zolt\u00e1n Farkas pointed out the deep gap between the original budget assumption of an exchange rate above 400 forints per euro and market reality.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cOne-third of the consumer basket is now under official regulation \u2014 this violates the fundamental logic of how the economy functions.\u201d<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\">Interest-Rate Policy: When Could Cuts Come?<\/h2>\n\n\n\n<p>One of the central questions of the debate was how to interpret the coexistence of a 6.25 percent base rate and 1.8 percent inflation. P\u00e9ter Quittner presented the MNB\u2019s position: the central bank measures not backward-looking but forward-looking inflation trajectories over 5\u20138 quarters, and currently uncertainties in energy markets, the Iranian conflict, and the unknown timing of the withdrawal of margin caps together justify caution.<\/p>\n\n\n\n<p>According to the consensus among analysts, however, the next step will still be a cut rather than a hike. \u00c9va Pal\u00f3cz considered a base rate of around 5 percent likely by the end of 2026, and according to the experts, from a 2027 perspective \u2014 provided ERM2 accession and fiscal consolidation are coordinated \u2014 even a level below 5 percent appears realistic. Participants identified the return of EU funds, a clear deficit-reduction trajectory, and the easing of Middle Eastern energy-price tensions as prerequisites for launching a rate-cutting cycle.<\/p>\n\n\n\n<p>The Croatian example emerged as a success story: the country, which became a eurozone member at the peak of inflation, has since achieved dramatically cheaper state financing and reduced its public debt from 86 percent to below 60 percent. At the same time, Gergely Tardos warned against simplistic analogies: Croatia\u2019s tourism-dependent economy was exposed to very different shocks than industrial, export-oriented Hungary.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Summary: Inflation Living in People\u2019s Minds<\/h2>\n\n\n\n<p>One of the strongest lessons of the debate was that the gap between statistically measured inflation and inflation perceived by economic actors is itself an inflationary risk. Households continue to expect price growth of around 5\u20136 percent, and an upward shift has also begun among businesses. As long as this level of expectations persists, the central bank will find it difficult to abandon its cautious stance \u2014 and real disinflation itself must therefore be regarded as fragile.<\/p>\n\n\n\n<p>In his closing remarks, P\u00e9ter Halmai emphasized that in a period of reassessment and replanning, it is particularly important for the profession to return regularly to these questions. In the coming period, the Department of Economic Policy and Economic Theory of the Hungarian Economic Association also plans deeper analysis of euro adoption and fiscal sustainability.<\/p>\n\n\n\n<p><em>This summary was prepared on the basis of an edited transcript, by AI application.<\/em><\/p>","protected":false},"excerpt":{"rendered":"<p>The Department of Economic Policy and Economic Theory of the Hungarian Economic Association convened leading representatives of the domestic analytical community for a roundtable discussion. During the ninety-minute debate, participants discussed the level of inflation, the sustainability of price controls, the exchange rate of the forint, and the possible direction of central bank interest-rate policy. 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