This is how the government wants to deal with the skyrocketing inflation

Hungarian government economy inflation
Photo: MTI/Zoltán Máthé

Government measures to control prices have cut inflation by over 5 percent, the prime minister’s chief of staff said on Thursday. Furthermore, Hungary’s government has decided to raise pensions by a further 3.9 percent from July in light of higher than expected inflation, bringing the overall pension hike to 8.9 percent, he added.

Financial experts agree that without the government-imposed price caps, inflation would be over 13 percent instead of the current 8.5 percent, Gergely Gulyás told a regular government press briefing. He noted that Prime Minister

Viktor Orbán on Wednesday announced that the government was extending the caps on fuel and some staple foods until July 1.

Hungary’s government is under pressure to let prices rise, Gulyás said, adding that the government would continue to review the feasibility of prolonging the price caps as long as it could and as long as the country’s oil and gas supplies were secure. In the current situation, the government has to prioritise the protection of families over market logic, Gulyás said.

Hungary’s government has decided to raise pensions by a further 3.9 percent from July in light of higher than expected inflation, bringing the overall pension hike to 8.9 percent, the prime minister’s chief of staff said on Thursday.

The 5 percent pension increase approved at the beginning of the year had been based on market expectations and the forecasts of foreign and domestic analysts,

Gergely Gulyás told a regular government press briefing. However, based on current projections and data from the finance ministry and the central bank, the government now believes that an annual inflation rate of 8.9 percent is more realistic, he added.

The government is required by law to compensate pensioners in November if inflation exceeds the rate of pension increases, Gulyás noted. But because of the significant difference between current inflation forecasts and the original pension hike, a quicker pension increase is warranted, he added.

Therefore, pensions will rise by a further 3.9 percent from the beginning of July, he said, adding that the inflation-linked increase would be paid retroactively from the start of the year.

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