Annual inflation in Hungary was 3.7 percent in February, the Central Statistics Office (KSH) said on Friday. On a monthly basis, prices rose by 0.7 percent. Meanwhile, Hungary’s cash-flow-based budget, excluding local councils, posted a deficit of 1,704 billion forints (4.321 billion euros) at the end of February, the finance ministry said on Friday, citing preliminary data.
Food prices increased by 2.2 percent, while household energy prices decreased by 9.0 percent. Services prices rose 10.0 percent, while consumer durables fell 2.0 percent. Commenting on the data, National Economy Minister Marton Nagy said in a statement that real wages rose again after September’s reversal, thanks to the continued fall in inflation and the increase in the minimum wage in December, further boosted by teacher pay increases and general dynamics of wages. In 2024, real wages could rise by more than 5-6 percent, he added.
After reducing inflation, the government will now focus on the “core task for 2024” of restoring economic growth. To achieve this, labor market activity must be further stimulated, the investment ratio must be maintained above 25 percent, and household consumption must be restored by strengthening consumer confidence.
The budget reported a deficit of HUF 1,704 billion February
Hungary’s cash-flow-based budget, excluding local councils, posted a deficit of 1,704 billion forints (4.321 billion euros) at the end of February, the finance ministry said on Friday, citing preliminary data. The central budget had a deficit of HUF 1,760 billion and social security funds were HUF 23.5 billion in the red, but individual state funds were HUF 79.0 billion in the black.
In January, the budget had a surplus of HUF 54.4 billion. The ministry noted that revenues in February were “several hundred billion” forints lower than the average month due to VAT seasonality. It said the fiscal impact of pension payments, including an annual bonus equivalent to a full monthly pension, reached 1,041 billion forints in February.
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In addition to covering extraordinary expenses, funds are provided in the budget for the protection of pensions and family subsidies, as well as maintaining the regulated prices of household services, according to the ministry. “The government’s goal is to gradually reduce the deficit and national debt,” he added. The government is targeting a deficit of 4.5 percent of GDP in 2024, 3.7 percent in 2025 and 2.9 percent in 2026, the ministry said. The entire annual deficit in the 2024 Budget Act is HUF 2,514.8 billion.
The EU transfers another HUF 30 billion in funding to Hungary
Another 30 billion forints (75.2 million euros) of previously blocked funding from the European Union has arrived in Hungary, Finance Minister Mihaly Varga said on Facebook on Friday. The funding will be used as pre-financing for investments to advance the green and digital transition, the finance minister said.
These funds will be used within the operational program for the environment and energy efficiency, Varga said. He said the transfer reduced the amount of funding withdrawn from cohesion funds for the period 2021-2027 to 1.22 billion euros, putting Hungary in 11th place among member states in terms of absorption. “Since the end of December, Hungary has received more than HUF 550 billion of previously blocked EU funding,” said Mihaly Varga.
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