Producer Price Index in Hungary

Hungary's Producer Price Index measures the change in factory-gate prices of industrial goods sold on the domestic market, excluding transport, distribution and taxes. Published by the Hungarian Central Statistical Office (KSH), it covers energy, mining and manufacturing, but not construction.

It is compiled from a regular survey of a broad sample of industrial establishments on their selling prices, producing a base-year index (=100) that is periodically rebased. The methodology is harmonised across the EU and is reported as year-on-year and month-on-month changes.

Producer prices are a leading indicator of inflationary pressure: higher production costs tend to feed through to consumer prices with a lag. A hotter reading points to firmer consumer inflation ahead and nudges the National Bank of Hungary (MNB) towards tighter policy and a firmer forint.

For the underlying trend it helps to strip out the most volatile component, energy. Given the weight of imports, the series is also highly sensitive to the forint exchange rate. The figures can be revised in later releases.