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MNB inflation indicators slightly up in June

In its monthly assessment, the National Bank of Hungary (MNB) said its measures of underlying inflation rose slightly in June compared to the previous month but remained in the 2-2.5% range, national news agency MTI reported Tuesday.

As reported earlier in the day, annual inflation was 3.1% in June 2018, a 0.3 percentage-point increase on the previous month.

Core inflation stood unchanged at 2.4%, while core inflation adjusted for the effects of indirect taxes was up 0.1 of a percentage point to 2.3%.

According to the projection in the MNBʼs June Inflation Report, inflation has temporarily risen slightly above 3% driven by the sharp increase in oil prices. Nevertheless, it added, the 3% inflation target will be achieved in a sustainable manner by mid-2019.

The MNBʼs indicator for demand-sensitive inflation, which excludes processed foods from core inflation, rose from 2.0% to 2.1%.

The indicator for sticky price inflation, which includes items for which retail prices vary, on average, by no more than 15% a month, rose from 2.2% to 2.4%.

Householdsʼ inflation expectations "remained at moderate levels" during the month, the central bank said.

Analysts see summer rise in CPI

Cited by MTI, Péter Virovácz, lead analyst at ING Bank, said inflation could rise higher than 3% over the summer, as the MNB expects. The weakening of the forint and higher oil prices pose a risk, he added, although inflation could still average 2.8% for the entire year.

Gergely Suppan of TakarékBank said inflation could be around 2.7% for the year, as the tempo of price rises decelerates by December. Inflation could fluctuate around 3% next year and average 2.8% for the year as a whole, he added.

K&H Bank chief analyst Dávid Németh noted how fuels and tobacco products had pushed inflation higher in June, adding that without these products inflation would have been unchanged from the 2.8% rate recorded in May. He predicted that CPI could be above 3% for the rest of the year and reach 3.3-3.4% by December, but concurred that it should still average 2.8% for the year as a whole.