Hungary’s factory gate price growth eases slightly in September

Hungary’s factory gate price growth eases slightly in September
/ bne IntelliNews
By Tamas Csonka in Budapest October 31, 2022

Factory gate prices in Hungary rose 42.7% y/y in September, slowing down from 43.4% in the previous month, the Central Statistics Office (KSH) said on October 28.

On a monthly basis, industrial producer prices were up 1.8% as prices for domestic sales increased by 2.5% and export prices climbed 1.5%.

"In addition to the steep rise in energy prices, dearer commodities prices and the weakening forint drove prices higher," KSH said.

Prices for domestic sale climbed 66.2%, boosted by energy prices, while export prices rose 30.7%.

The rise in domestic industrial producer prices exceeded the historical average throughout 2022 and and has risen more than 40% since April on an annual basis, hitting a new historic high of 66.6% in August.

The annual price increase of more than 90% in the energy-producing sectors reflects the rise in European energy prices, with the surge in gas prices as a result of the decline in gas supply from Russia playing a major role

KSH said that prices for domestic sale of the manufacturing sector, which accounts for a 62% weight in the PPI, increased 39.5%, while prices in the energy sector, which has a 33% weight, rose 137%.

Export prices of the manufacturing sector, which has a 96% weight, rose 26.3%, while energy sector export prices, with only a 3.8% weight, jumped 168% because of the global rise in energy prices.

In the first nine months, factory gate prices climbed 32.3% y/y as prices for domestic sales were up 47.4% and export prices increased by 24.6%.

Headline and core inflation topped 20% in September, a 26-year-high, and analysts are now forecasting a peak of around 25% in early 2023. At the last rate-setting meeting last week, Hungarian National Bank Deputy Governor Barnabas Virag said lower global commodity prices and the slowdown in domestic demand are pointing to a slowdown in inflation.

Analysts noted that the narrowing of the current account deficit, with the retreat of energy and the forint’s recent rally, could ease inflationary pressures.