Hungary’s consumer price inflation speeds up to 1.4% y/y in Sept 2013, above forecast.

By bne IntelliNews October 14, 2013

Hungary's annual consumer price growth accelerated to 1.4% in September 2013 from 1.3% in August, the statistics office said. The reading was above market expectations for a 1.1% growth, according to a poll by portfolio.hu. On a monthly basis, consumer prices in the country increased by 0.5%, reversing from a 0.3% m/m drop in the previous two months.

The annual growth in food prices eased to 1.7% in September from 2.7% in August. Prices of alcohol beverages and tobacco products rose by 10.9% y/y, after a 9.1% y/y hike the month before. Costs of services advanced by 3.3% y/y in September, faster than the 2.9% y/y increase in August. Prices of motor fuels remained unchanged.

By contrast, prices in the group of electricity, gas and other fuels declined by 8.1% 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 1.7% on the year, reflecting continued weak household demand. Prices of clothing and footwear saw a 0.3% y/y fall.

The Hungarian central bank decided on September 24 to cut the base rate by 20bps to a new historic low of 3.60%. 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.

Consumer prices, % y/y              
  Jan-13 Mar-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13
TOTAL  3.7 2.2 1.8 1.9 1.8 1.3 1.4
Food 5.8 3.4 3.7 4.1 2.8 2.7 1.7
Alcoholic beverages, tobacco 13.1 11.7 9.8 8.8 8.6 9.1 10.9
Clothing and Footwear  0.8 -0.4 -0.2 -0.1 -0.2 -0.5 -0.3
Consumer durable goods -2.1 -2.2 -1.8 -1.7 -2.1 -2.2 -1.7
Electricity, gas and other fuels 2.4 -8.1 -8.5 -8.7 -8.8 -8.7 -8.1
Other goods incl. motor fuels and lubricants 1.3 1.5 -0.7 0.1 1.7 0.4 0.0
Services  3.1 3.8 4.1 4.0 3.5 2.9 3.3
Source: KSH              

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