Hungarian consumer confidence plunges in August to lowest since April 2020

BUDAPEST, Aug 29 (Reuters) – Hungarian consumer and business confidence deteriorated further in August, a survey by think tank GKI showed on Monday, with household confidence plunging to its lowest level since April 2020, the first wave of the COVID-19 pandemic. .

Hungarian households have become more gloomy about their financial outlook amid soaring inflation and energy prices.

“The GKI Consumer Confidence Index is in free fall,” the think tank said. “Consumer inflation expectations strengthened further in August after a pause in July.”

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The GKI Consumer Confidence Index dipped to minus 49.2 points from minus 41.7 in July, and has fallen sharply from minus 17 in February. The overall index, which includes both households and businesses, fell to minus 14.3 points from minus 9.4 in July.

The GKI said companies’ plans to raise prices gained further momentum, particularly among industrial companies, in August, while more than 70% of companies in the retail sector said they planned to increase their prices.

With energy costs soaring and the forint weak, the National Bank of Hungary (NBH) faces the challenge of tackling persistent inflation while maintaining the momentum of the Hungarian economy.

The central bank is expected to raise its base interest rate (HUINT=ECI) by 100 basis points to 11.75% on Tuesday, with more hikes to come this year as inflation continues to rise.

Deputy Governor Barnabas Virag said earlier this month that inflation could peak later and at a higher rate, around 18% to 19%, than expected, and only start to decline from next year at a slow pace. Hungary’s core inflation jumped to an annual rate of 16.7% in July, the highest in 25 years. Read more

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Reporting by Krisztina Than; Editing by Christian Schmollinger

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Laura T. Thrasher