Hungarian net wages to continue growing at high single-digits

The rate of average wage growth slowed slightly compared to the previous month’s rate, according to the latest report by the Hungarian Central Statistical Office (HCSO). In December 2025, average wages increased by 8.5% year-on-year, which was broadly in line with market expectations. The average annual wage growth rate was 9% in 2025.

Taking inflation into account, it can be said that the purchasing power of wages remained on a substantially upward trajectory throughout last year. By the end of the year, net real earnings had grown by 6.3% YoY. According to our calculations, the figure for 2025 as a whole was 4.4%. However, even this significant increase in purchasing power was insufficient to stimulate the Hungarian economy. In fact, GDP growth in 2025 was slower than in 2024. Although consumption increased as a result of positive real wage growth, this alone was not enough to pull the Hungarian economy out of stagnation.

The sharp decline in inflation seen in January, which we think will continue in February, combined with average wage increases likely to remain at around 9-10%, could lead to further acceleration in real wage growth. This may already be reflected in improving consumer confidence, which could further stimulate consumption. The accelerating pace of consumption growth could help to restore business confidence, thereby generating a mutually reinforcing process.

Speaking of the December wage statistics, a mixed picture emerges when looking at individual sectors. In the business sector, the average wage growth rate of 8.7% is faster than in the previous month. At the same time, however, wage growth slowed dramatically in the budgetary sector, with growth at only 7.3% compared to the previous low double-digit rate. This can be partly explained by more modest bonus payments, since regular earnings growth was higher in both the budgetary and business sectors than the wage data calculated with bonuses. This suggests that companies and the state were less generous when deciding on year-end bonuses. Wage growth also slowed somewhat in the non-profit sector, which happens to be the least significant in terms of the national economy as a whole.

Wage growth in December was well above average in sectors where bonuses are typically paid at the end of the year, such as agriculture, mining and energy. In contrast, public administration experienced one of the sharpest slowdowns.

Looking at 2026, the 11% and 7% increases to the minimum and guaranteed minimum wages in January could be a key factor in wage growth. Additionally, the payment of a six-month lump sum bonus for the armed forces in February will significantly impact the annual average: according to our calculations, this alone could add up to 1ppt to the average. Given that the economy continues to be characterised by structural labour shortages and companies are still hoarding labour, we expect average annual wage growth to be around 10% for the year as a whole.

The biggest question is how companies will manage adversity. If the expected economic recovery in early 2026 fails to materialise, some companies may decide to pass on more of their wage costs by raising prices. This is most likely to happen in the second half of the year, leading to additional inflation later on. Other companies may prefer to rationalise their workforce, which would pose a further negative risk to growth prospects for this year.

The low repricing seen in January and the expected continuation of dynamic wage growth may lay the foundation for favourable annual averages at the beginning of the year. With inflation at around 3% or below, real wages could grow by an average of over 7% this year.