Good news on inflation at last: inflation fell more than expected in March

HUNGARY - In Brief 08 Apr 2025 by Istvan Racz

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The headline rate was 0% mom, 4.7% yoy, down from 5.6% yoy in February, core inflation was 0.3% mom, 5.7%, down from 6.2% yoy, non-fuel inflation was 0.3% mom, 5.2% yoy, down from 5.6% yoy: Note: year-on-year changes in percent; Sources: KSH, own estimates Importantly, analysts expected the headline rate at 5% yoy for March, i.e. materially higher than the actual. Of the difference, 0.1%-point was due to the fact that KSH brought out fuel prices with -4.1% mom, which was a 1.5%-points steeper decrease than the one suggested by the available high-frequency data. But the rest, i.e. two-thirds of the difference was due to something else. At this point, there seems to be broad agreement among experts that the newly introduced cap on the retail margin of a number of basic food items must have had only a little influence on the March data. This is because KSH's monthly write-up period for retail prices ended on March 20, and the administrative cap was introduced on March 17, just a few days earlier. Indeed, no one knows anything more than this about how much of an effect the cap may have had on food inflation in March, but the consensus seems to be that the bulk of the impact will affect the April data. And this is also what the Economy Ministry keeps suggesting. Anyway, the ministry claimed earlier that the margin cap pushed down the prices of the affected products by 16% initially. In a fresh announcement, Mr. Nagy said that the prices of some 894 articles had fallen by an average 18.8% since the start of the measure. Unfortunately, the latter is not the same as saying by how much the prices of all affected products have decreased. But even with a moderately estimated 15% ...