Gulyás: Government commitment to push inflation into single digits by end of year is still realistic

“It might be achieved in November, but, as also suggested by forecasts, we can certainly deliver on this commitment by December,” Gergely Gulyás said.

Gergely Gulyás, Head of the Prime Minister's Office, said the government has made a commitment to push inflation into the single digits before the end of this year which is still a realistic undertaking despite the difficulties.

“It might be achieved in November, but, as also suggested by forecasts, we can certainly deliver on this commitment by December,” Gulyás said, adding that “there are some worrying signs which are related primarily to the fact that fuel prices are now higher than they were before”. He attributed soaring fuel prices to the five-fold increase in the transit fee of fuel imported via Ukrainian pipelines. “Fuel price increases in the past one month have alone increased inflation by half a percent,” he said. Gulyás said that a European Commission ban imposed on Ukrainian grain imports in five neighbouring countries would expire on September 15 and if the EC does not extend the ban “we will be forced to introduce measures in national authority”. “We are again asking the EC from here to understand the rationale behind the decision and extend the current import ban”, he said. It would be best to find a solution that meets the original goal which was to help African countries suffering from starvation instead of damaging European agricultural markets, he added.

Gulyás added that in response to calls by the ruling Fidesz group, the government has reassessed its earlier decision on solar panels. The government has decided that the new rules by Brussels must apply only to those who had submitted their applications to install solar panels after September 7. Referring to the 5th Budapest Demographic Summit to be held on Thursday and Friday, Gulyás said Hungary had made significant progress in the area over the past decade but “we are not yet where we would like to be”. In 2010, when the civic government of Hungary received its mandate to introduce new demographic policies, the total fertility rate (TFR) was 1.23 and it went up to 1.59 by the end of 2021. He added that this represented a 25.6% increase, the largest in the EU over the past decade. Had the previous trend not changed, some 160,000 children would not have been born between 2011 and 2021, he added. At the same time, there are some difficulties, with the number of women of childbearing age on the decrease, which makes it all the more important that family policy measures remain effective, he said. Gulyás said the cabinet had assessed a proposal on replacing “city CSOK” subsidies in a first reading on Wednesday. The government is introducing new family policy measures next year that serve the country’s demographic targets and also help people acquire a home, he said. Gulyás said the president and the prime minister will also address the summit and it will be attended by numerous international guests, including the Italian prime minister and the Bulgarian president.

Government spokesperson Alexandra Szentkirályi congratulated to Hungary’s cave rescue team for a “world-famous achievement” helped also be government bodies. She added that the cave rescue team had been contacted on September 2 concerning an emergency situation in southern Türkiye involving a US national stuck in a depth of 1,000 metres. “It tells a lot about the preparedness and attitude of the Hungarian Cave Rescue Service that the European organisation of cave rescue services which coordinated the operations found them “the fastest to mobilise medical team which would be able to not only reach an extreme depth but also work there,” she added. Szentkirályi said that the government bodies and background institutions made every effort to help the work of the Hungarian rescue team, with the defence ministry providing transport services and the foreign ministry offering 2.5 million forints for the operation. The government projects 6% inflation next year and the central bank between 3.5% and 5.5%, so it will reach a manageable level by 2024, said Gulyás. 

Szentkirályi said that an online price monitoring website launched by the government had gained popularity with members of the public, with 1.2 million visitors so far spending an average 4 minutes and 20 seconds on the website. The website has resulted in considerable competition, with prices decreasing an average 7% in 55 of the 62 categories it listed, she added. Fines totalling 72 million forints have been imposed on retailers so far for refusing to offer mandatory price cuts, she said. It is not acceptable for multinationals to profiteer and damage Hungarian people, she added. Gulyás said that an educational film made in Sweden stating that Hungarian democracy had been deteriorating since 2010 was “a baseless accusation and unjustified insult”. If such a film is being shown in state schools, it means that Sweden is making every effort for Hungary not to ratify its NATO accession. He said he would recommend to the Fidesz group leader that MPs should decide if they want such a country as a member of NATO.
Commenting on soaring fuel prices, Gulyás said the government was looking to find alternative sources, adding that it viewed the five-fold increase of transit fees as “incorrect business conduct”. Answering a question, Gulyás said the government would not change the price of household gas until December 31. He added that if prices were adjusted to fluctuating world market prices, the price of electricity would have to be radically increased both below and above the utility price cap limits and the price of gas below that limit.

Answering another question, he said the government would assess at the end of September whether a pension adjustment should be carried out. Asked about the payment of EU funding Hungary is entitled to, Gulyás said that the government hoped that the European Commission would “return” to acting in line with the law and that there would be no obstacles that hinder the unlocking of funds. He argued that Hungary had met all criteria set by Brussels and the EC had until November to take a decision. Regarding access to funds available under the current seven-year budgetary framework, Gulyás said Hungary aimed to get the full amount and the government was conducting talks in Brussels accordingly. Commenting on recent talks by Klára Dobrev, an MEP of opposition DK, with an American “pro-war” politician supporting weapon deliveries to Ukraine, Gulyás said the Hungarian left wing would deliver weapons to Ukraine if they were in power. He called the left wing’s pro-war stance “an irresponsible” policy towards the around 100,000 ethnic Hungarians living in Ukraine’s Transcarpathia region.

Commenting on Wednesday’s address of the EC president, Gulyás said that the government was not surprised that Brussels had not changed its position on the war in Ukraine, on migration and the LGBTQ issues. “We would welcome it if Brussels addressed Europe’s real problems,” he said. Europe has a vested interest in achieving peace, Gulyás said, adding that the government would not support migration quotas and migrant redistribution schemes. He said it was difficult to figure out from Ursula von der Leyen’s Wednesday speech whether Hungary would receive any contribution to the costs of the fence it had erected on its border, but he expressed hope that a part of it would be reimbursed. Commenting on reports that Ukraine was ready to amend its minority laws, he said the foreign ministry was also ready for this. When President Katalin Novák held talks with Ukrainian President Volodymyr Zelensky, one of the five points they agreed on was that the issues concerning ethnic minorities’ language use must be addressed. An acceptable solution would be for Ukraine to reach an agreement with Hungary and amend the situation. Once an agreement is reached, the Ukrainian parliament approves it and the law enters force, then the reason for Hungary blocking Ukraine’s Euro-Atlantic aspirations will cease to exist, he said. “We would like this to happen”, he said.

Commenting on negotiations about Budapest airport, Gulyás said that they would not reveal details before an agreement is reached. The “good news” would be announced in every detail once the agreement is signed, Gulyás said. He said it was unreasonable to compare the amount allocated for purchasing the airport with the amount needed to raise teachers’ wages. The raise of teachers’ salaries is being postponed not by the government but by left-wing MEPs lobbying in Brussels against teachers getting 800,000 forints a month while they pocket 6 million forints, he added. The purchase of the airport could increase state debt but not the budget deficit, he said. Gulyás said it was in Europe’s interest that economic ties are maintained with all large economic powers and accordingly, Hungary wants to maintain cooperation with China. Prime Minister Viktor Orbán is expected to visit China in October, he added. In response to a question about Hungary not handing over to Ukraine refugees who had been drafted in the army, he said no such request had been received from Ukraine and in line with the Geneva Convention, refugees must not be handed over anyway. In response to a comment regarding an increasing number of refugees crossing the border to Slovakia illegally, he said all Hungary could do was to protect the southern borders. By doing so, Hungary also protects Slovakia from tens of thousands or hundreds of thousands of refugees, he added.

Photo credit: MTI