At its October meeting, the Monetary Council of the central bank left the base rate unchanged from the previous month, slowing monetary easing. Thus, the base rate in Hungary currently stands at 6.5%.
In August, retail sales increased by 4.1% year on year on both a raw and calendar-adjusted basis. Within this, compared to the same period of the previous year, sales increased by 7.5% in specialised and non-specialised food shops and by 2.9% in non-food retailing, while sales decreased by 1.2% in automotive fuel retailing.
Measured up to September 2024, the value of the monthly SZIGMA CI indicator, which provides a snapshot of the current state of the Hungarian economy, was -0.383. This is down from the previous month’s index value of -0.308. This means that the growth rate of the Hungarian economy is continuing to move away from its historical trend rate, in other words, economic growth momentum is still weakening.
The other indicator, SZIGMA LEAD, a short-term forward-looking indicator for the Hungarian economy, is most recently forecast to remain above trend, but slightly weakening, until the end of the forecast horizon.
In September 2024, consumer prices rose by an average of 3.0% on an annual basis, i.e. in line with the central bank’s target.
The average price decline in consumer durable goods shows an improving trend
The average price decline of 0.2% in consumer durable goods in August and September shows an improving trend, supported by a number of external and internal factors. These include sustained lower commodity prices, efficient supply chains, slowly growing demand and tight monetary policy. If we look at the main group in more detail, we can see that the price of new passenger cars increased by 6.3% and jewellery by 10.7%, which is above average. Deflation in consumer durable goods was supported by a 3.5% fall in the prices of durable goods for recreation, a 4.4% fall in computers, cameras and telephones and a 5.4% fall in motorcycles. It is also important to mention the positive trend in the market of second-hand passenger cars, where the price paid for second-hand cars in September was already 6.1% lower compared to the respective period of the previous year, which has a significant impact on the overall result of the main group, due to the high weight of just over 2%.
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.
