Consumer prices rose 6.4% year on year in November and were up 0.2% from October, the Central Statistics Office (KSH) announced on Tuesday.
Erste Bank Zrt‘s Orsolya Nyeste said the inflation figures came as no surprise. She added that the 4.6% twelve-month rise in core inflation shows the effect of the government’s austerity measures. She projected prices would continue to rise, to peak over 8% in Q2 2007, followed by a slowdown. The central bank will probably leave rates on hold in December, but they could raise them at the first rate-setting meeting in January, she said.
HVB Bank Zrt‘s Márta Szegő also said a 25bp rate rise was more likely in January than in December. She added that the bank might still hold off if the forint continues to trade between 254 and 257 to the euro. Szegő said the 1.4% rise in food prices from October to November was remarkable. She attributed the increase to the jump in seasonal produce prices as the forint weakened in July through September. Meat prices, she said, have risen to their level from a few years ago. Clothing became more expensive and consumer durable prices stagnated in November, unlike in previous months when both fell, she said. Szegő put year-end inflation at 7% and average annual inflation at 3.9%-4%. In January, inflation could pick up, with household energy prices rising as much as 2%-2.5% on the back of another increase in centrally regulated prices. She said inflation would peak around 8% mid-year, but year-end inflation could fall back to 4%, she said. She projected average annual inflation of 6.3%-6.5% in 2007.