Hungary's inflation rises to 1.6%: The central bank is lowering its target to 2.5% starting in 2028

Hungary's consumer prices in September were 1.6% higher than in the same month a year ago, according to the National Office of Statistics (KSH). Compared to August, they rose by 0.2%. In August, the year-over-year rate had been 1.3%.

Cheaper Food, More Expensive Gas

Food prices were 1.3% lower than a year ago. Butter became 15.6% cheaper, pork 11% cheaper, and cheese 10.2% cheaper. Household energy costs fell by 4%: gas became 11% cheaper, while electricity became 1.3% more expensive.

Fuel prices rose by 6.9%. On a month-over-month basis alone, the increase was 5.9%. Services rose by 4.9%. Taxi rides cost 11.5% more, and vehicle repairs 8.3% more.

Fresh fruit became 14.4% cheaper, sugar 8.2%, and milk 8.1%. Potatoes, on the other hand, cost 7.8% more, cooking oil 6.4%, and restaurant meals 5.8%. Among services, theater tickets rose by 17.6%, freight transport by 14.9%, and postal services by 9.6%. Personal care costs increased by 8.4%.

Alcohol and tobacco rose by 3.3%, with tobacco products alone increasing by 4.2%. Durable consumer goods cost 1.2% more, and pharmaceuticals 1.3%. Domestic vacation travel became 7.9% cheaper month-over-month, while travel abroad became 4% cheaper. Prices for clothing and shoes rose by 1.3% in August.

Central Bank Lowers Target

The Monetary Council of the Hungarian National Bank (MNB) left the key interest rate at 5.50% on September 22. At the same time, it set the inflation target for the period beginning January 1, 2028, at 2.5%. The statement reads: “Maintaining the current interest rate conditions is necessary to achieve the inflation target sustainably.”

Core inflation stood at 2% in August. The MNB expects inflation of 1.8% for 2026 and 3.1% for 2027. It raised its forecast for 2027, driven by energy prices and the tobacco tax. In terms of growth, the central bank expects 1.8% this year and 2.9% next year.

The MNB’s deposit rate stands at 4.50%, and the rate for secured overnight loans at 6.50%. The Monetary Council took a break in September following the rate cuts over the summer. Going forward, it plans to set interest rates eight times a year rather than monthly, according to the Portfolio website. The economy grew by 1.7% in the second quarter of 2026.

For German exporters, this means that prices in Hungary will remain stable, but the 5.50% key interest rate will make loans for investments more expensive. Suppliers of consumer goods are facing customers with falling food prices. The higher forecast for 2027 suggests that it would be wise to review price escalation clauses in contracts for the coming year.

Sources: KSH (HU/EN), MNB (HU/EN), Budapest Business Journal (EN)

SK, Frankfurt