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HUF: Forint Firmer Following Feb CPI, Hungary to Curb Basic Food Retail Margins

HUF
CEEMEAEM BulletBulletEmerging Market NewsHungary

The forint has gained around 0.2% versus the single currency following the above-consensus inflation print for February. The figures have shifted HUF FRAs higher, indicating that money markets see an even narrower scope for rate cuts through 2025. Despite today’s pullback, EURHUF remains contained within yesterday's ranges. Support to watch is at the 395.00 handle. USDHUF, meanwhile, sits 0.9% lower and close to last week’s ~5-month low.

  • Surging food prices (including a 44% rise in the cost of flour, 25% for eggs and 22% for milk) and services prices offset favourable base effects in fuel, while annual core inflation reached its highest since December 2023. See a full breakdown of the data here.
  • In a post on social media following the data, Prime Minister Orban said Hungary will limit retail price margins for basic food items at 10% from mid-March to help curb food inflation – an idea he floated last month. The measures will apply to 30 basic items such as butter and eggs and will remain in force at least through May, when it will be reviewed.
  • Government price caps have previously attracted criticism from former NBH Governor Gyorgy Matolcsy, but given the appointment of Mihaly Varga as the new chief is set to reset central bank-government relations, Orban’s ruling party may find they face less resistance in introducing the measures this time around.
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The forint has gained around 0.2% versus the single currency following the above-consensus inflation print for February. The figures have shifted HUF FRAs higher, indicating that money markets see an even narrower scope for rate cuts through 2025. Despite today’s pullback, EURHUF remains contained within yesterday's ranges. Support to watch is at the 395.00 handle. USDHUF, meanwhile, sits 0.9% lower and close to last week’s ~5-month low.

  • Surging food prices (including a 44% rise in the cost of flour, 25% for eggs and 22% for milk) and services prices offset favourable base effects in fuel, while annual core inflation reached its highest since December 2023. See a full breakdown of the data here.
  • In a post on social media following the data, Prime Minister Orban said Hungary will limit retail price margins for basic food items at 10% from mid-March to help curb food inflation – an idea he floated last month. The measures will apply to 30 basic items such as butter and eggs and will remain in force at least through May, when it will be reviewed.
  • Government price caps have previously attracted criticism from former NBH Governor Gyorgy Matolcsy, but given the appointment of Mihaly Varga as the new chief is set to reset central bank-government relations, Orban’s ruling party may find they face less resistance in introducing the measures this time around.