Hungarian consumer confidence plummets in May amid soaring inflation | Investment News
BUDAPEST (Reuters) – Consumer and business confidence in Hungary deteriorated in May after an improvement in April, a survey by think tank GKI showed on Monday, as households grew gloomier about their financial outlook in a context of soaring inflation.
With soaring energy costs and war in neighboring Ukraine fueling further price pressures, the National Bank of Hungary (NBH) faces the challenge of tackling persistent inflation while maintaining momentum of the Hungarian economy.
The BNH said that inflation, which stood at 9.5% year-on-year in April, its highest level since June 2001, is expected to increase further in the coming months and average between 9% and 10 % This year.
GKI said in its monthly survey on Monday that business confidence fell 5.5 points while consumer confidence plunged 9.5 points in May, after rising in April.
“Consumer inflation expectations strengthened again in May after weakening in April,” GKI said.
“Since the outbreak of the war between Ukraine and Russia, businesses and consumers have been very pessimistic about the future of the Hungarian economy, and this pessimism intensified a lot in May.
Businesses expected price increases, albeit to a lesser extent than in April. Customers became more pessimistic about their financial and savings outlook in May.
Since last June, the BNH has raised its key rate by 450 basis points to 5.4%.
Credit demand is expected to slow in Hungary according to the BNH, which still forecasts GDP growth of 2.5% to 4.5% for 2022 after a very solid first quarter.
(Reporting by Krisztina Than; Editing by Christopher Cushing)
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