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Consumer Prices Accelerate Slightly As Inflation Set To Stay Low In Hungary

Tamás Székely 2016.01.15.

Consumer prices in Hungary rose by an annual 0.9% in December, accelerating from a 0.5% increase in November, the Central Statistical Office said. The headline figure was in line with the estimate by emerging market analysts in London, who attributed the rise mainly to base effects, namely a big drop in fuel prices in the same month a year earlier.

While food prices rose by an annual 2.2% in December and prices of tobacco and spirits increased by 3.8%, consumer durable prices were up by 1.7% and service prices climbed by 1.5%. Clothing prices edged down by 0.1% and household energy prices slipped by 0.2%. Prices in the category of goods that includes vehicle fuel were down by 2.8%.  In a month-on-month comparison, consumer prices index (CPI) dropped by 0.3% as prices of goods in the category that includes vehicle fuel went down by 0.8%. Hungary’s average annual inflation was down by 0.1% in 2015. Core inflation, which excludes volatile food and fuel prices, was 1.4%.

Harmonised for better comparison with other European Union member states, Hungary’s CPI was up by 1.0%.  The harmonised rate shows an increase of 0.1% and core inflation was 1.2%. Pensioners’ prices rose by an average annual 0.4%. Takarékbank analyst Gergely Suppan forecast a continued, albeit moderate acceleration in CPI in the coming months on base effects. Annual average inflation this year could still remain under 2%, he said. CIB Bank analysts put average annual inflation in 2016 at just over 1%.

The National Bank of Hungary’s (MNB) “underlying measures of inflation” all fell in December, in spite of acceleration in headline CPI, data published by the central bank show. The indicator for core inflation, excluding indirect tax effects, was 1.1% in December, down from 1.2% in the previous month. The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, was 1.5%, slipping from 1.8%; while the indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15% a month, was 1.7%, down from 1.8% in the previous month.

The Hungarian central bank said the levels “indicate a restrained inflation environment”. In previous months, the central bank had noted the levels “continue to indicate a moderate inflation environment”. “Households’ inflation expectations have been broadly unchanged since early 2015, remaining at moderate levels in line with low underlying inflation developments,” the central bank added.

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