The Hungarian National Bank (MNB) anticipates inflation at 3.1% in September, with a gradual increase expected for the rest of 2024, peaking slightly above 4.0% in December.
The MNB adjusted its inflation forecast to 3.5-3.9%, up from its June estimate of 3.0-4.5%, driven by higher external costs. Disinflation is projected to continue in 2025, as core inflation is expected to decline in the second half of the year, returning to the central bank’s target range. The National Bank estimates that the increase in Hungary’s transaction tax will raise inflation by 0.2-0.3 percentage points in 2024, affecting consumer prices directly through higher banking fees.
Inflation in Hungary (1991 – January-August 2024). Change in consumer prices compared to the same period of the previous year, in percentage. Source: MTI
Indirect effects on inflation could be felt throughout 2024, while the full impact on market services may not appear until 2025.
Economic growth was revised down from 2.0-3.0% to 1.0-1.8%, with market services being the primary driver. However, weak industrial orders and agricultural slowdowns due to drought are expected to limit growth. The MNB forecasts GDP growth between 2.7-3.7% in 2025, spurred by a rebound in investment and improved external demand.
Despite slowing growth, employment is at record highs, though labor market pressures are easing. Fiscal reforms are expected to reduce Hungary’s government deficit to 3.5-4.5% of GDP by year-end, while the debt-to-GDP ratio will narrow only slightly.
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