Hungary’s inflation may peak at 25%-27% in first quarter, minister says

BUDAPEST (Reuters) -Hungary’s inflation could peak at an annualised rate of 25%-27% in January or February, Minister of Economic Development Marton Nagy said on Thursday, raising his earlier projection of price increases.

Inflation in 2023 could come in at 15%-16%, state news agency MTI quoted Nagy as saying at a conference in Budapest.

Soaring inflation is posing a challenge to nationalist Prime Minister Viktor Orban’s government, which on Tuesday extended existing price caps on basic foodstuffs including milk, sugar, flour, vegetable oil, eggs and potatoes until April 30.

Price growth also poses a challenge to the National Bank of Hungary, which was forced to ramp up interest rates in October to stem sharp losses in the forint currency despite an economic slowdown.

Hungarian headline inflation rose to an annual 22.5% in November from 21.1% in October, boosted by surging food and energy prices, and was expected to rise further as the government scrapped a fuel price cap earlier this month.

Last month, before the end of the year-long fuel price cap, Nagy said he expected inflation to peak at an annual 25% by the end of this year.

Nagy also said the government aims for a 3.5% budget deficit for next year, down from 4.9% this year, while it expects GDP growth to decline to 1.5% in 2023 from an estimated 5% in 2022.

(Reporting by Anita Komuves; editing by Alan Charlish and Paul Simao)