This year’s inflation is being stirred up by the price increase of service providers following inflation

Great Martin According to the assessment of the Minister of National Economy at the beginning of April, inflation has collapsed – as quickly as it came, it went away. On the same day, the new report of the KSH came out, according to which consumer prices in March 2024 were on average 3.6 percent higher than a year earlier. However, the report also stated that the prices of services went up (+9.9%), including, for example, the price of telephone and internet services by 10.8 percent.

So it seems that, despite the general moderation, services are pushing up inflation because they are becoming more expensive far above the central bank target. According to the Portfolio.hu article, the bad habit of service sector players to raise prices this year with the average inflation of the previous year may be at least partially behind the phenomenon. ING’s senior analyst, Péter Virovácz he also told the newspaper that inflation may start to rise again in Hungary in two rounds, and the movement of the annual price change may also affect inflation expectations. According to the analyst, large inflation swings should be expected in the future.

This year, for example, telephone companies, banks, insurance companies, and other service providers, including small service providers, applied rate increases that follow inflation (or close to it). But to what extent it is justified for the various service providers to increase by the rate of general inflation is the minimum question. NMHH previously stated to our newspaper regarding the inflation-adjusted increase in telephone charges that if the service provider complied with the relevant rules during the contract amendment, and the introduced condition contains exactly how the charges will change, then this step by the service provider is not illegal.

As it turned out, the authority does not examine the economic justification (lawfulness) of the service providers’ retail pricing, the service providers are not obliged to set prices based on costs. It is not the reasonableness of the service provider’s cost increase that justifies the fact that the price changes were linked to the CSO’s consumer price index. Rather, the rate of inflation is an objective figure, a numerically precisely defined value that can be easily identified and known to the contracting parties and everyone else.