August 22, 2022
Hungary will experience a lot of challenges over the coming years. Life will be increasingly difficult for both locals and the Hungarian government due to rising costs, a shortage of gasoline, the unfavorable effects of the KATA tax changes, a worsening drought, and higher-than-ever inflation.
The Magyar Nemzeti Bank, the nation’s central bank, constantly emphasizes that domestic inflation is a result of imports. The protracted battle is also largely blamed by the Hungarian government for the rising prices. But rather than just concentrating on external issues, it is now time to take home aspects into account as well, according to telex.hu.
According to privatbankar.hu, the true cause of the soaring inflation, which is quickly approaching 20 percent, is a complicated issue. János Nagy, an economist at Erste Bank, predicts that the peak will occur in the nation in the first quarter of 2023. The issues are numerous. Inflation is on the rise as a result of tax increases, the drought, and problems with the price of gasoline. The increase in rates (the partial “re-marketing” of gas and electricity), which went into force in August, will directly affect inflation by 3–4 percentage points, according to Lajos Török, a senior analyst at Equilor Zrt.
The present impact of the revised gasoline price cap legislation is negligible—less than 1%. If not extended, the retail price cap is in effect until October 1. According to Lajos Török, an extension by the Hungarian government seemed unlikely. Many gas stations already have a supply problem. As a result, November inflation should increase by another 2-3 percentage points.
There is yet some reason for optimism. Certainly, the current situation would improve if the Russian-Ukrainian war ended. In around 6 quarters, the impact of the interest rate increase will be felt. The effects of the increase in interest rates in the summer of 2021 will also be seen shortly.
Source: Daily News Hungary
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.
