Hungary's consumer price inflation eased to 4.2% in April, down from 4.7% in March, as falling food and fuel prices and moderating services costs began to weigh on headline figures, according to the Central Statistical Office (KSH).

Analysts projected the headline data to drop to 4%, which would still have exceeded significantly relevant data from Eurozone, where inflation also slowed, from 2.3% in February to 2.2% in March.

On a monthly basis, prices rose 0.2% and core inflation, which excludes volatile fuel and food prices, was 5.0% versus 5.7% in March.

The 0.5pp decline in annual inflation was partly offset by higher prices in non-core categories like tobacco and household energy.

Food prices fell 1.3% month on month, attributed to the government's decision to impose a markup on retailers' profit margin on 30 group categories from mid-March. Prices of margarine, milk products, and flour fell by double digits, while broader declines were seen across dairy, meat and edible oils.

In annual terms, food prices went up 5.4%, consumer durable prices edged up 2.0% and service prices grew 7.0%, down from 7.5% a month earlier.

Seasonal repricing in telecoms and financial services, normally seen in the spring, was largely muted after government pressure led firms to delay planned price hikes until after the 2026 elections. Still, some price increases appeared in the statistics, suggesting partial implementation or transitional effects.

Despite the downward momentum, core inflationary components such as services and household energy continue to exert upward pressure, highlighting the ongoing challenge for the central bank as it gauges the path of rate cuts.

The National Economy Ministry said the markups cap on household products could cut prices in the designated categories by 16-18% and the measure could shave 0.4pp off headline data. The ministry pledged to take action against any "unjustified" price increases and said the aim was to bring headline CPI to 3-4% and food price inflation under 5%. The government will decide at the end of the month to extend the profit margin cap on food products applied to large supermarkets.

ING Bank analyst Peter Virovacz described the KSH reading as a "mildly unpleasant surprise", emphasising that statistical disinflation is being driven by short-term administrative measures, rather than durable macroeconomic trends.

The bank raised its 2025 average inflation forecast to 4.5%, and now sees 2026 inflation closer to 4%, highlighting the risk that today's suppressed prices may lead to higher inflation later. While headline inflation is falling, core inflation remains elevated, dropping only slightly to 5.0% in April, reinforcing concerns that Hungary's inflationary cycle may prove stickier than in other CEE peers.

Amundi's baseline scenario assumes that headline inflation will fall below the central bank's 4% tolerance band in December. The government's interventions are causing greater-than-usual uncertainty and pose downside risks, compounded by trade policy uncertainties. Weaker-than-expected domestic economic performance could also curb household demand, a trend already visible in March retail sales data, it added.

Voluntary reductions in household banking fees could trim Hungary's monthly inflation rate by around 0.1pp in May, according to Bankmonitor analysts. This follows the rollback of inflation-linked price hikes on account services introduced earlier this year.

UniCredit Bank analysts said the latest inflation data doesn't strongly support more rate cuts this year, though global market conditions and weaker domestic demand could justify a single rate cut. The forint's movements suggest that foreign investors are demanding high real interest rates on Hungarian assets.

According to UniCredit there are still strong repricing tendencies in the economy, especially in categories considered wage-intensive or in medicine, textbooks, and catering, and products that are not subject to price caps or voluntary price commitments also showed stronger repricing.