Hungary's inflation may be between 15% and 18% next year, the governor of Hungary's National Bank reported on Monday, sharply criticizing the government's price caps on fuel, basic foodstuffs and mortgages.
Governor Gyorgy Matolcsy told a parliamentary committee that "all price caps should be removed immediately", according to a transcript of the meeting. At the same time, he also slammed the expansionary fiscal policy implemented by the government in 2021, which he said had exacerbated inflationary pressure.
"We, NBH have warned that the government's crisis management strategy for the past half year is wrong," said Matolcsy, referring to the price cap, voicing harsh criticism of the government's move.
He said the price cap had prompted retailers to raise the prices of other products without price caps, adding 3% to 4% to inflation.
He also cited fuel price caps, which have encouraged people to use more even amid the energy crisis. Preliminary retail sales data on Monday showed fuel sales jumped 19.7% year-on-year in October.
Hungary's National Bank kept its key rate unchanged at 13% at the end of November and pledged to maintain tight monetary conditions for a "prolonged period", with inflation only to decline more significantly from mid-2023.
Matolcsy told the committee that annual inflation, which was running at 21.1% in October, is now largely driven by a surge in food prices due to low productivity and monopolies in Hungary's food sector and a high share of imports.
The average inflation in 2022 is expected to be recorded at a reading of 13.5%-14.5% based on the forecast in September. November consumer price data will be released on Thursday, with a Reuters poll of analysts seeing annual inflation at 22.2%.
Matolcsy said inflation is "enemy number one", adding that NBH will fight it with all possible means.
