Moderation of inflation in 2024

Lorem Today's release of inflation rate in Slovakia for December completes the data for the whole region for 2024. The average inflation went visibly down compared to 2023, with the most significant decrease observed in Hungary, from 17.6% to 3.7% in 2024, which is already within the central bank's tolerance band around the 3% inflation target. In Czechia, we have seen similar development, with the average inflation at 2.5%, only slightly above the central bank's 2% inflation target. In Croatia and Slovenia, which are under the jurisdiction of the ECB, the average inflation was at 3% and 2%, respectively. In Poland, inflation in 2024 ended up at 3.7%, only marginally above the upper bound of the central bank's tolerance band around the inflation target. Poland was also the only country in CEE that did not deliver any monetary easing last year, as opposed to other CEE countries. Finally, Romania had the highest inflation rate at 5.6% last year. The increase in the budget deficit by almost 2 percentage points between 2023 and 2024 delivered quite a substantial fiscal impulse. Especially, the government pursued an agenda of raising public sector incomes in a heavy election year. Public sector wages increased by nearly 20%, while public pensions were hiked at almost double that pace, being one of the reasons behind demand-side inflationary pressures.