Hungarian consumer confidence falls in May amid surging inflation

Reuters

Published May 23, 2022 12:51AM ET

BUDAPEST (Reuters) - Hungarian consumer and business confidence worsened in May after an improvement in April, a survey by think tank GKI showed on Monday, as households turned gloomier about their financial prospects amid a surge in inflation.

With soaring energy costs and the war in neighbouring Ukraine fuelling further price pressures, the National Bank of Hungary (NBH) faces the challenge of fighting persistent inflation while maintaining momentum in the Hungarian economy.

The NBH has said that inflation, which was running at 9.5% year-on-year in April, its highest level since June 2001, was expected to rise further in coming months and average between 9% and 10% this year.

GKI said in its monthly survey on Monday that business confidence dropped by 5.5 points while consumer confidence plunged by 9.5 points in May, after a rise in April.

"Consumers' inflation expectations strengthened again in May after a weakening in April," GKI said.

"Since the outbreak of the Ukraine-Russia war companies and consumers have been very pessimistic about the future of the Hungarian economy, and this pessimism intensified a lot in May."

Companies were planning price rises, albeit to a slightly less extent than in April. Customers turned more pessimistic about their financial and savings prospects in May.