September CPI-inflation marginally better than expected

HUNGARY - In Brief 08 Oct 2025 by Istvan Racz

---

The headline rate remained unchanged at 4.3% yoy for the third consecutive month in September, on zero inflation in this single month, just as it happened in August. Core inflation was unchanged as well, at 3.9% yoy, also on unchanged prices on average in September alone. The media appears to be presenting this as somewhat better than expected, as analysts predicted a slight increase in the yoy headline rate, to 4.4% yoy. Well, they were right in the sense that they thought 0% mom inflation should lead to a rise in the yoy rate by one decimal point, given the same number was -0.1% mom in September 2024. So, the difference, by which the September actual was better than analysts' forecast was not more than a rounding error. But even so, the September figures were not bad at all. Food prices saw a non-seasonal 0.2% mom decrease, reducing the yoy rate to 4.7% from August's 5.9%. Service price inflation actually accelerated to 5.9% yoy from the previous 5.4% yoy, but that was due to a base effect only: the monthly average change was -0.4% in September, not a bad result at all. In conclusion, CPI-inflation continues to be just short of decreasing to the top end of the MNB target range, adding, of course, the important footnote that the Economy Ministry's heavy hand is suppressing further inflation (of 1.3%-point by MNB estimates) by current administrative price controls. For end-2025, the headline rate could be equally somewhat below or above 4% yoy, depending how serious the government will be about their new initiative to talk down the forint. Should EURHUF be let to stay at 390, a below-4% end-year inflation rate could be seriously on the cards. Conversely, driving EURHUF...