Headline inflation rate down sharply in December, further reduction is likely in Q1

HUNGARY - In Brief 13 Jan 2026 by Istvan Racz

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Headline CPI-inflation was 0.1% mom, 3.3% yoy in December, the latter sharply down from 3.8% yoy in November. Despite the significant move by the yoy rate, this data was no surprise: the median analyst expected exactly this outcome, according to Portfolio.hu, and our own forecast table included 3.2% yoy. The good-looking December numbers were due to a combination of decreasing fuel prices (-1.7% mom, -8.6% yoy, the latter down from -5% yoy previously), and decelerating non-fuel inflation (the monthly rate here down to 0.2% mom from 0.4% in December 2024). In addition to depressed fuel prices, but also greatly contributing to it, the forint's year-on-year appreciation actually intensified in December: EURHUF fell 6.6% yoy, and USDHUF dropped by 16.6% yoy (!), the latter looking like a historic record. For sure, the strong forint is depressing inflation across-the-board, and the dollar's weakness is particularly helpful in pushing down domestic fuel prices, which in turn has a very strong secondary counter-inflationary impact all around the whole economy. In addition, the administrative restrictions on retail sales margins were not only extended until end-February the last time, but 14 new food items were added to the restricted list from December 1. The one-time impact of the new additions was -0.2%-points on the whole CPI, according to information derived from what the MNB said at the recent presentation of their Q4 inflation report. Most, if not all, of the latter impact probably appeared in December. In a good part as a direct consequence of these restrictions, food inflation has slowed down to 2.6% yoy. It looks like the authorities (government + MNB) do everything ...