Budapest, August 11 (MTI) – Consumer prices in Hungary edged up an annual 0.4 percent in July after a 0.6 percent rise in June, the Central Statistical Office (KSH) said on Tuesday.
Analysts forecast July headline inflation of around 0.5 percent.
Prices of alcoholic beverages and tobacco products increased by 3.9 percent while household energy prices fell 2.7 percent and fuel prices dropped 8.4 percent compared to a year earlier.
Food prices rose by 0.9 percent while the price of clothing eased by 0.2 percent.
Services prices were up by 1.9 percent and the price of other products was down by 2.8 percent.
In a month-on-month comparison, consumer prices as a whole were unchanged in July.
In January-July, consumer prices were down by an annual 0.3 percent on average.
Hungary’s annual CPI harmonised for better comparison with other European Union member states was 0.5 percent in July. Core inflation, which excludes volatile fuel and food prices, was 1.3 percent. CPI calculated with pensioners’ consumer basket was 0.8 percent.
The economy ministry said the steady inflation rate was a boost to predictability, allowing households and companies to plan for the long term. The ministry projected the index flat-lining. It attributed the stable consumer prices largely to the government mandated cuts to utility fees and low oil prices.
The ministry said Europe’s deflationary environment and the sanctions against Russia were also keeping prices stable. Stable prices boost real wages and pensions and in turn, the disposable income of households, ultimately leading to higher consumption, the ministry said.
K and H Bank analyst David Nemeth said the July inflation rate was in line with expectations and the bank’s inflation projections would remain unchanged. The bank reckons the inflation rate at the end of the year will be an annual 3 percent.
Erste analysts Vivien Berczel and Gergely Urmossy said the monthly deceleration of 0.2 percentage points had exceeded their estimates, as the bank had expected a deceleration of 0.1 of a percentage point. The analysts forecast inflation averaging 0.3 percent over the year.
Gergely Suppan of Takarekbank said inflation was below expectations and forecast a flat rate for the coming months.
ING Bank senior analyst Andras Balatoni said the July data was in line with estimates. He said the slow consolidation of core inflation continued, demonstrating that higher retail sales are giving companies more leeway to set prices. Economic growth will likely boost inflationary pressure, he added.