Macro Monitor – January 2024


At its January meeting, the Monetary Council of the central bank continued to cut both its policy rate and its base rate, as it had done the previous month. As a result, the Hungarian base rate (and the policy rate) currently stands at 10.00%, down 75 basis points.

Both raw data and calendar-adjusted data show that retail sales decreased by 5.4% in November 2023, compared to the same period of the previous year. Within this, sales decreased by 0.6% in specialised and non-specialised food shops and by 3.9% in non-food shops. The turnover volume of petrol stations fell by 21.4%, significantly more than the other main groups.

In January 2024, the value of the SZIGMA CI indicator, which provides feedback on the current state of the Hungarian economy, was -0.061 up to December 2023, weaker than the previous month’s value, as the indicator already showed above-trend growth in the previous month. Current data suggest that the growth rate of the Hungarian economy has slowed and is stagnating below trend.

The other indicator, SZIGMA LEAD, which is a short-term forward-looking indicator for the future of the Hungarian economy, predicts a slowing and gradually decreasing trajectory in the growth rate of the Hungarian economy.

In a still higher but decreasing interest rate and inflation environment, the trend towards a preference for premium Hungarian government bonds with above-inflation yields over those with fixed yields continued.

The average price decrease of 1.0% for consumer durables in December

The average price decrease of 1.0% for consumer durables represents a significant improvement compared with the previous period, driven by factors including strict monetary policy, sustained lower input material prices, the resumption of more efficient supply chains, falling demand and a significantly stronger exchange rate compared with the same period a year earlier. Looking at the main group, above-average increases were also recorded for kitchen and other furniture (7.0%), motorcycles (9.6%) and radios (7.0%). Consumer durables inflation is moderated by a 3.0% decrease in television prices and a 1.4% decrease in the prices of computers, cameras and telephones. It is also important to highlight the improving trend for second-hand cars: in December, second-hand cars were already 10.3% less expensive than a year earlier, which has a significant impact on the overall result for the main group, due to the high weight of just over 2%.

• The SZIGMA indicator system

The SZIGMA (abbreviation of the Hungarian name “Századvég Index a Gazdasági Momentum Alakulásáról”, in English: Századvég Index of the Development of Economic Momentum) is a simultaneous and preliminary indicator system developed by Századvég for the Hungarian economy.

It is crucial for economic policymakers and analysts to have an accurate picture of the state of the economy, but statistical data are often available with considerable delays. In contrast, the SZIGMA indicators provide information on the economic cycle and the business cycle within 30 days of the reference month, on a monthly basis.

The indicator system consists of two indicators, the SIGMA CI, which summarises the current state of the economy, i.e. information extracted from simultaneous variables, and the SIGMA LEAD, which provides preliminary information on the expected economic trajectory. A positive CI index means that economic growth is above the historical trend, and a negative CI index means that growth is below the historical trend. The SIGMA LEAD indicator provides a short-term forecast for a 9-month period. If the SIGMA LEAD indicator is positive, growth is expected to be above trend in 9 months’ time (i.e. three quarters of a year later), while if it is negative, growth is expected to be below trend in the near future.