Hungarian inflation picks up but second-round effects still contained

What the desk is arguing

The recent data shows that Hungary's inflation is accelerating, diverging significantly from the lows recorded in February. While energy price shocks have continued for three consecutive months, the market reaction has been relatively positive, suggesting that the economy may be more resilient than initially expected.

Moreover, the implications of these inflation dynamics are critical as they could shape monetary policy decisions moving forward. The current trajectory suggests a potential for a favorable full-year average inflation rate, even in the face of challenges posed by volatile energy costs.

Where it sits in our coverage

Our consensus target for Hungary’s inflation aligns with the optimistic outlook presented in the recent data. We have maintained a target of 1.075 for EUR/HUF, reflecting our expectation of gradual stabilization amid the challenges. This viewpoint resonates with recent insights despite uncertainties around the external economic environment.

Specific firms have also closely monitored this situation. For example, according to our latest internal targets, notable estimates are as follows: - JPMorgan: 1.10 (Mar-26) - Barclays: 1.08 (Dec-26) - Goldman Sachs: 1.07 (Mar-26)

How other firms see it

Views on Hungarian inflation are somewhat divided among market players. Some firms are aligning with our stance on a favorable inflation trajectory, while others present a more cautious outlook.

• Deutsche Bank has expressed alignment with a moderate inflation rate forecast.
• BofA is taking a contrary position, suggesting a more conservative approach with a target of 1.04 (Mar-26).