Consumer prices in Hungary rose 8.3% in February, accelerating from 7.9% in the previous month, data released by the Central Statistics Office (KSH) on Wednesday show. Analysts are starting to raise their forecasts for the year as the impact of higher energy prices and the weak forint will fully exert their impact from March.

The figures were in line with projections of the National Bank (MNB).

The increase was broad-based, with 80% of the 140 product and service subgroups surveyed registered a price increase rate higher than 3%.

Inflation strengthened for almost all major product groups, except clothing and other goods and fuel, where the acceleration was mainly prevented by the fuel price freeze.

Households are feeling the pain of the sharp rise in food price, which grew 11.3% y/y, as the price of bread jumped 25% and poultry prices climbed 19.2%, but pork prices increased just 1.3%. The price cap on half a dozen food staples did little to stem the increase.

The MNB attributed the higher February CPI mainly to an increase in food and industrial goods prices, while climbing core inflation was fuelled by a pick-up in price rises of processed food, industrial goods and services.

The MNB pointed to a higher pace of repricing, driven by higher global commodity and energy prices manifesting "quickly and across a wide range of product groups".

The measure of core inflation excluding indirect tax effects – a bellwether indicator of underlying inflation – rose to 8.1% in February from 7.4% in the previous month. In just three months, the indicator has jumped close to 3pp.

Price regulations have reduced headline inflation by 3-4pp, said Marton Nagy, the prime minister's chief economic advisor, who was earlier the deputy governor of the MNB. He estimated that Hungary's regulated utilities price scheme for households cut headline CPI by 1.5-2pp, while temporary caps on vehicle fuel prices and some staple foods shaved off close to 1pp and 0.8-1.0pp respectively.

He warned that sanctions on Russia could translate to a significant loss for the Hungarian economy, through rising energy and food prices.

As for outlooks, analysts said it remains extremely difficult to give an accurate estimate, but both domestic and import inflation are showing massive dynamics. Besides the negative economic impact of sanctions, higher energy prices and the weaker forint, the wage pressure is also putting upward pressure on inflation.

ING Bank chief analyst Peter Virovacz noted that food price growth accelerated in February, in spite of the price caps on staples. If price controls are allowed to expire in May, CPI could reach double digits. He put average annual inflation in the 7.5-9% range and said the MNB base rate could reach 8% by mid-year as tightening continues, depending on how the war in Ukraine develops.

Takarekbank puts average annual inflation at 7.5%, but the impact of the war in Ukraine could override the outlook for CPI as well as for GDP, it added.