New data on inflation: has Hungarian inflation fallen below the psychological threshold?

Annual inflation in Hungary was 25.2 percent in March, down from 25.4 percent in the previous month, the Central Statistical Office (KSH) said on Wednesday.

The raw data

Month on month, headline inflation was 0.8 percent. Annual food-price inflation was 42.6 percent in March, while household energy prices rose by 43.1 percent, MTI reports. Prices in the category of goods that includes vehicle fuel increased by 23.3 percent, while the prices of spirits and tobacco products grew by 19.7 percent.

Harmonised CPI, adjusted for better comparison with other European Union member states, was 25.6 percent. Core inflation, which excludes volatile fuel and food prices, was 25.7 percent. CPI calculated with a basket of goods and services used by pensioners was 26.7 percent.

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What were the expectations?

The rate of decline was smaller than expected. The rate of inflation did not fall below 25 percent, the psychological threshold. This suggests slower disinflation.

Looking at the structure of inflation, it seems that the price increases for household energy and food remain the strongest, Portfolio reports. The retail promotions might have led us to believe that food prices would moderate substantially. However, we saw another 1.5 percent increase on a monthly basis, just below the February rate. On a year-on-year basis, the pace of food price increases has also fallen less than expected.

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