Santa Claus brought higher fuel prices to households this year

HUNGARY - In Brief 07 Dec 2022 by Istvan Racz

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In Hungary (and much of Central Europe), it is Little Jesus who takes responsibility for Christmas gifts to children. Santa Claus has a separate day, which is December 6, to deliver his presents. This year, Santa had a special gift for local families. Last night, a press conference was held at 22:30, at which the discontinuation of the administratively set subsidised fuel prices for individual car owners (essentially for households) was announced, with immediate effect. This was no surprise at all, as massive queues with increasing length developed at petrol stations all around the country over the last few days. The measure is expected to stop massive hoarding of fuels, on expectation of eventual massive price increases, cross-border and other types of price arbitrage, and also the restart of commercial fuel imports, which is especially important when the only local refinery is under maintenance or repair. By this measure, the average price of fuels sold to households is rising by an estimated 41%. This adds 2.6% to the CPI as a direct impact, 80% of which is set to appear already in December. This makes our end-year CPI-inflation forecast no less than 25%, as regards the headline rate. These impact numbers are a bit higher than the ones we gave you two days ago, because the starting non-subsidised wholesale prices MOL announced last night were also higher than the previously announced ones, which should have taken effect this morning for non-household customers in principle. The good news is that not a lot of second-round impact is likely, given that enterprises have been paying non-subsidised petrol and diesel prices for several months already. One important lesson ...