Hungary’s Inflation Surprise: Why the Rate-Cut You Expected May Be Off the Table—And What That Means for Your Investments
Hungary’s economic pulse might just be playing a little game of peekaboo right now — industrial production is gearing up for a rebound in July after June’s underwhelming performance, a crucial lifeline to sidestep a slide in third-quarter GDP. But hold up, because August throws a curveball: a heatwave-triggered energy crunch where factories might have to dial down production voluntarily. Meanwhile, inflation’s quietly creeping back thanks to rising fuel costs and that ever-fluctuating Forint, nudging headline inflation by about 0.2%. Yet, despite this stirring mix of challenges, ING’s Peter Virovacz sticks to his guns that interest rate cuts are still on the menu — quite the balancing act when you factor in rising yields and the shaky currency situation. Makes you wonder — can Hungary’s economy dance this tightrope without missing a beat? Dive deeper and see what experts forecast next. LEARN MORE
ING’s Peter Virovacz expects Hungarian industrial production to rebound in July, helping avoid a third-quarter GDP decline despite August headwinds from heatwave-related energy issues. August inflation is seen rising on higher fuel prices and a weaker Forint, with a 0.2% monthly print lifting headline inflation, though ING still anticipates continued rate cuts despite a more complex backdrop.
Industrial rebound and inflation pickup
“Following a disappointing performance in June, we expect a rebound in industrial production in Monday’s release, which is in line with the jigsaw pattern of monthly performance that has recently emerged.”
“A good start to the third quarter will be crucial for avoiding a quarterly drop in GDP, as the heatwave and the related energy crisis will definitely bring a significant decrease in industrial production volumes in August due to voluntary production reduction.”
“Tuesday brings the release of August inflation.”
“We estimate that fuel prices will add roughly 0.10-0.15ppt to the monthly inflation rate in August.”
“However, some seasonal factors will counterbalance this, with an expected 0.2% monthly inflation reading pushing up the headline figure after months of disinflation.”
“In our view, the 1.4% figure itself won’t make the Monetary Council stop cutting interest rates.”
“Still, rising yields, higher energy prices and a weaker HUF make the picture more complex.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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