Hungary's inflation may have accelerated as energy bills jumped
The central bank raised its benchmark two-week deposit rate to 6.75% in July. By comparison, the Czech Republic's main rate is 2.25% and the rate shared by the 12 nations using the euro is 3%. Policy makers next meet on Aug. 29. The central bank said July 7 that the inflation rate may rise to between 6% and 7% next year from 3.2% to 3.4% this year. The government wants to keep inflation at less than 5.5% next year. In July, the rising cost of gasoline and services, including trash collection, local transport, car rentals and theater tickets, pushed inflation higher. Higher value-added taxes and utility bills in the months ahead will exacerbate the issue, said Radomir Jac, an emerging-markets strategist at PPF Asset Management in Prague. „It will be very interesting from September,” said Jac. ”The real story will come with changes in VAT and price deregulation.”
The central bank will publish an updated report on inflation Aug. 29. The government last month abandoned its quest to adopt the euro by 2010 because it will fail to meet EU targets. „There is no target date now, only a target, and that is to push the budget shortfall under the 3% threshold as soon as we can,” Economy Minister János Kóka said during a Budapest briefing July 27. (Bloomberg)
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