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BUDAPEST: Hungarian consumer confidence plunged to its lowest level since April, a survey by think tank GKI showed on Monday, as households turned gloomier about their employment and financial prospects amid a surge in inflation.
Hungarian inflation surged to an annual 6.5% in October, above expectations and driven in part by a 30.7% increase in fuel prices, which prompted Prime Minister Viktor Orban’s government to impose a three-month price cap.
Hungary’s central bank, which expects inflation to exceed 7% in November, was forced to ramp up the pace of its monetary tightening campaign to rein in inflation and shore up the forint, which skirted its April 2020 all-time lows last week.
“All participants of the economy expect price rises,” GKI said in its monthly survey, which showed business confidence rising to a 2-1/2-year-high, driven by stronger optimism in most branches of the economy except for services.
“However, consumer (confidence) fell to an extent rarely seen over the course of a single month, sending it to levels last seen in the spring,” GKI said.
It said worries about unemployment increased significantly, even as the share of companies planning to boost hiring exceeded those of planning layoffs in all branches of the economy.
Companies were planning price rises, while consumer inflation expectations also jumped, the survey said. It said households as well as industrial and service sector businesses turned gloomier about prospects for the economy.
Customers were also more pessimistic about their financial and savings prospects in November, breaking a six-month period of improvement, the survey said.
Facing a closely fought election next year, Orban’s government has showered the electorate with handouts, including a $2 billion income tax rebate for families and an extra month’s worth of pensions.
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