Headline inflation up temporarily on fuel prices, core inflation markedly down in June

HUNGARY - In Brief 08 Jul 2025 by Istvan Racz

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The headline rate of CPI-inflation in June has been reported this morning at 0.1% mom, 4.6% yoy, the latter up from 4.4% yoy in May. This uptick was entirely due to fuel prices, which rose by 0.5% mom. Here the point is that fuel prices actually fell by 3.4% mom in June 2024, and the difference between the two numbers caused a 0.3%-point upward shift in the year-on-year headline rate in itself. So, non-fuel inflation actually decreased to 5% yoy in June, from 5.2% yoy in the previous month. The monthly rate of non-fuel inflation was 0.1%, also a good number after a 0.2% rise in the same month of 2024. Food prices were up by 0.1% mom, which looks quite all right after the 0.6% mom jump in May, which was then caused by seasonal food items, like vegetables and fruit, once again because of bad weather conditions. However, a 0.1% monthly rise is still to be considered quite high compared to the seasonal pattern, so one can legitimately conclude that seasonal items still had some inflation-boosting impact in June. Removing seasonal food as well, core inflation looked really fine, with 0.1% mom, 4.4% yoy in June. The latter fell from 4.8% yoy in May, and the result is that core inflation is now lower than the headline rate, and it is also lower than any reading since June 2024. Please, note that fuel prices started July with some decrease, which, just as the uptick in June, is the result of the Izrael-Iran conflict's impact on oil import prices. The latter have returned to almost exactly where they stood before the eruption of that conflict. The dollar's weakness and the MNB's hawkish policy mode have been extremely helpful: in June, the forint's average year-on-year deprecia...