Hungary's annual consumer price growth decelerated to 0.9% in October 2013 from 1.4% in September, the statistics office said. The reading was below market expectations for a 1.3% growth, according to a poll by portfolio.hu. On a monthly basis, consumer prices in the country decreased by 0.3%, reversing from a 0.5% m/m rise in the previous two months.

The annual growth in food prices eased to 1.1% in October from 1.7% the month before. Prices of alcohol beverages and tobacco products rose by 10.5% y/y, after a 10.9% y/y hike in September. Costs of services advanced by 3.8% y/y in October, faster than the 3.3% y/y increase a month earlier.

By contrast, prices in the group of electricity, gas and other fuels declined by 8.9% y/y, with costs of natural gas, electricity and purchased heat each dropping by 10% y/y. Prices of consumer durable goods extended their downward trend, falling by 1.9% on the year, reflecting continued weak household demand. Prices of clothing and footwear saw a 1.4% y/y fall in October, faster than September’s drop of 0.3% y/y. Prices of motor fuels also decreased by 1.5% y/y.

The Hungarian central bank decided on October 29 to cut the base rate by 20bps to a new historic low of 3.40%. The Monetary Council considers that the bottom of the monetary policy easing could be at 3.00-3.50% and said that further cautious easing of monetary conditions should follow, considering the outlook for inflation and the real economy and taking into account perceptions of the risks associated with the economy. The bank also lowered its forecast for the average annual inflation in 2013 to 2% from 2.1% projected in June.