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Varga: CPI will stay down, Hungary junk rating “a joke”

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The rate of consumer price inflation in Hungary will not rise significantly even after the effect of utilities price cuts wears off, National Economy Minister Mihály Varga said on public television on Wednesday.

Varga conceded that government-mandated utilities price cuts that will save Hungarians 20% on their bills this year had done much to bring CPI under 1%, but told broadcaster M1 that inflation would not “take off” even after the effect of the reductions passes.

He reiterated the government’s estimate for average annual inflation of 2.4% next year, well under the National Bank of Hungary (MNB)’s 3% mid-term target for “price stability”.

Hungary’s CPI was 0.9% in November, the Central Statistics Office (KSH) said on Wednesday, a near 40-year low.

Varga said the Hungarian economy was performing better and better, and fiscal revenue was also improving. He called Hungary’s “junk” sovereign rating “a joke” and expressed hope for upgrades in 2014.

He noted that auctions of government securities had been 5-6 times oversubscribed recently. 

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