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Consumer Prices Continue To Sink in October

Tamás Székely 2014.11.12.

Hungary’s annual consumer price index was negative 0.4% in October, slowing from a 0.5% decline in September. Emerging market analysts in London had put the October index between -0.1% and -0.3%. In a month-on-month comparison, consumer prices fell 0.3 % in October, the Central Statistical Office (KSH) said.

The third phase of utility price cuts has contributed significantly to the October statistics, as – in accordance with the decision of the National Assembly – the retail price of gas for private consumers decreased by 6.5 percent as of 1 April, that of electricity was lower by 5.7 percent as of 1 September and that of district heating was cut by 3.3 percent as of 1 October. Besides lower utility prices, the low inflationary environment prevalent in Europe has also influenced Hungarian prices. In October, falling crude oil prices on global markets also curbed inflation. Lower prices for clothing also had a dampening effect.

Seasonally adjusted core inflation, which excludes volatile fuel and food prices, was an annual 1.5% in October. According to KSH statistician Borbála Mináry it would be mistaken to envision classical deflation, since no prolonged price drop are seen in other areas. Erste Bank analyst Gergely Gabler also said the data showed no danger of deflation because the decline in prices had not been the result mainly of fundamentals but of the government’s utility price cuts. Bálint Török of Buda-Cash Brókerház, noting low global inflation, said inflation could remain low for a good while.

via kormany.hu and hungarymatters.hu photo: alternativenergia.hu