Hungary's May inflation slows to 1.8%, bolstering hopes of a rate cut

Hungarian consumer‑price inflation fell to an annual 1.8% in May, down from 2.1% in April, according to the Central Statistical Office. Prices were broadly unchanged on a monthly basis, with the biggest surprise coming from a decline in food prices despite the usual seasonal rise. Analysts attributed the slowdown mainly to the strong forint, which helped curb price growth in several categories, and to existing price‑cap measures.

The better‑than‑expected data prompted most forecasting houses to lower their inflation outlook for the year, with some predicting an average of around 2.6%‑2.8% for 2024. The surprise has been described as a “green light” for the Magyar Nemzeti Bank, which may consider a June policy‑rate reduction. The monetary council is expected to debate whether to cut rates by 25 or 50 basis points. Some analysts warned that inflation could pick up again later in the year, especially if external factors such as energy prices or the ongoing conflict’s energy impact shift.