Regional differences in prices, inflation and the cost of living in Hungary in the 2020s

Abstract

At the beginning of the 2020s, Hungary faced serious challenges: the combined impact of the epidemic, the energy crisis, and inflation, livelihood and consumption shocks, transformed economic and social conditions. The consequences of these shocks have not abated by the middle of the decade and the economy is not expected to return to the growth path of the 2010s in the changed circumstances. It is undeniable that these effects have affected different social groups in different ways. The present paper looks at the issue from the perspective of regional differences in prices and living costs and seeks to answer the question of how national trends have affected the cost of living at the regional level. It starts by presenting the evolution of Hungary's position in an EU comparison, and then examines domestic price dynamics and cost of living differentials at the regional level. The results point to significant Capital versus rest of the country differences, and the unintended adverse income redistributive effect of inflationary trends is also evident.