Hungary’s CPI increased to 1.1% in November, pushing above 1% for the first time since September 2013, data from statistics office KSH showed on December 8. The rise was largely in line with market expectations.
CPI swung back to positive territory in September following four months of deflation in a row. The October and November reading show a slow but steady gain in the headline data, which supports the Magyar Nemzeti Bank's (MNB) pledge that it will not cut benchmark interest rates.
The main drivers of the CPI rise in November were price increases for alcoholic beverages, tobacco and services. The ongoing increase in fuel prices, in parallel with the stabilisation on global oil markets, also contributed.
Consumers paid 0.6% more for motor fuels than in November last year. Food prices increased 0.7%; alcoholic beverages and tobacco rose by 2.1%, services by 1.8%, and clothing and footwear by 0.6%. Electricity, gas and other fuels were unchanged.
On a monthly basis, CPI rose 0.1% in November; the core inflation index - which omits erratic prices including global commodities – accelerated to 1.5% from 1.4% the previous month.
Analysts at CIB Bank suggest that the annual average CPI may be close to 0.4%. "The November figure does not reshuffle this year’s outlook. Also, we do not expect any shift in the monetary policy outlook,” they wrote in a note.
While CPI remains well below the 3% mid-term inflation target of the MNB, the stronger CPI reading appears likely to confirm current monetary policy. The MNB has repeatedly guided that it plans to leave interest rates at a record low of 0.9% for the foreseeable future and use unconventional measures to loosen policy.