Hungary's industrial producer prices declined by 1.1% y/y in May 2014, softening from a 1.5% y/y fall in the previous month, the statistics office said. On a monthly basis, prices were down by 0.8% in May, decreasing at the same pace as in the previous month.
The annual drop was driven by a 2.4% y/y decrease in domestic prices and a 0.3% y/y fall in export prices.
Prices in the manufacturing sector, which traditionally determines the overall price dynamics, stagnated on an annual basis in May after decreasing in March and April. Manufacturing domestic prices picked up by 0.7% y/y, offsetting a 0.3% y/y drop in export manufacturing price.
In our view, the dynamics of the PPI points to lower inflationary pressure on consumer prices in the short term. Hungary's consumer prices edged down by 0.1% y/y in April after rising by 0.1% the month before.
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