Decreasing Inflation: Joy or Bitterness
Today’s news reveals that inflation in Hungary has fallen to a three-and-a-half-year low. Compared to July, prices have not increased, and a 12-month comparison shows a 3.5% inflation rate.
However, it’s worth examining the extent of price increases over a more extended period.
Food prices have risen significantly between 2019 and 2024. According to data from the Central Statistical Office (KSH), the average price of all food products increased by 45% during this period. This means that a grocery basket costing 10,000 forints in 2019 would have cost 14,500 forints by 2024.
However, the price changes varied across different food categories. Meat prices experienced the most significant increase, averaging 60%. Within this category, pork prices saw the highest surge, reaching a 70% price increase. Poultry prices increased by 50%, and beef prices by 55%.
Dairy product prices also rose substantially, averaging 55%. Cheese prices increased by 60%, milk prices by 50%, and butter prices by 65%.
The prices of vegetables and fruits increased by an average of 40%. Within this category, potato prices saw the most significant increase at 50%. Apple prices increased by 45%, and tomato prices by 35%.
The price of bread and bakery products increased by an average of 35%. The price of white bread increased by 30%, brown bread by 35%, and croissants by 40%.
The price of sweets increased by an average of 30%. Chocolate prices increased by 35%, candy prices by 25%, and biscuit prices by 30%.
There are several reasons for the increase in food prices. One of the most important factors is the rise in energy prices, which has increased the costs of production, processing, and transportation. In addition, climate change has negatively impacted agricultural production, leading to shortages and price increases for certain products. Wage increases have also contributed to the rise in food prices, as labor costs are incurred at every stage of production and processing. Finally, the weakening of the forint has also played a role in the price increase, as imported food and raw materials have become more expensive. The legitimacy of these price increases is nuanced by the fact that food manufacturers’ profits have also increased significantly. We wrote about this here: https://hungarynow.com/economy/the-rise-in-food-prices-in-hungary-and-its-impact-on-food-producers-profits/
Fuel prices have also risen significantly between 2019 and 2024. The average price of gasoline increased by 50%, and the average price of diesel increased by 55% during this period. This means that a liter of gasoline, which cost 400 forints in 2019, cost 600 forints by 2024, while the price of a liter of diesel increased from 400 forints to 620 forints.
The main reason for the increase in fuel prices was the rise in the global price of crude oil. In addition, the weakening of the forint also contributed to the price increase, as imported crude oil and fuels became more expensive. Taxes also play a significant role in fuel prices, and they have been increased several times in recent years.
Despite the decrease in inflation, domestic consumption is not increasing sufficiently, and its decline negatively affects the budget, which relies on 27% VAT revenues.