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A real roller coaster, consumer prices up 3.0% yr/yr

Consumer prices rose 3.0% yr/yr in July and were up 0.2% from June, the Central Statistics Office (KSH) announced on Friday. Twelve-month inflation was up from 2.8% in June, but the monthly increase slowed from 0.3% in June. The twelve-month figure was slightly higher than analysts' consensus estimate of 2.9% in a poll by Dow Jones. Seasonally-adjusted core inflation, which excludes volatile fuel and food prices, was 0.5% compared to June and 1.9% compared to July 2005. In June, core inflation was 0.3% compared to May and 1.3% compared to twelve months earlier.

Twelve-month core inflation was lowest in January, measuring just 0.5% yr/yr, and it was 0.7%-0.8% yr/yr in the following three months. In May-July, core inflation rose in every month. Headline inflation in January-July averaged 2.6% yr/yr. Excluding tax changes, which included a five percentage point cut in the main VAT rate to 20%, effective January 1, 2006, consumer prices rose 0.2% from June and were up 4.8% from June 2005. According to the harmonized consumer price index (HICP), prices increased 0.2% from June and were up 3.2% from July 2005. Food prices fell 0.4% compared to June, in the first monthly decrease since last September. A marked 12.2% drop in seasonal food prices helped the fall from June. Excluding seasonal foods, food prices rose, however, by a sharp 1.7% from June, boosted by big increases in pork, poultry, bread and sugar prices. Clothing prices fell a sharp 2.1% in a month. Consumer durable prices fell by another 0.5%, despite a continued weakening of the forint. Household energy prices rose just 0.1% from June. The price of "other goods", which include vehicle fuel, rose 1.4% from June as fuel prices rose 4.9%. Prices of services also rose at an above average 0.7%, KSH said, noting that the price of recreational services rose 9.6% from June. Despite the monthly drop, July food prices were still up a sharp 6.4% in twelve months, with seasonal food prices up 29% from a year earlier, the price of sugar up 12.5%, egg prices up 11.5%, pork up 7.7% and milk up 6.8% in the period. The price of alcohol and tobacco rose 0.1% from June and 3.3% yr/yr.

Higher-than-average price rises were recorded in the group of "other goods", where prices rose 4.0% yr/yr, including a 12.3% increase in the price of vehicle fuel. The price of services continued to rise more than the average, at 3.7% from a year earlier. Among services, public transport prices were 9.2% dearer, rubbish pickup cost 5.9% more, sewage fees rose 5.4% and the price of recreational services rose 4.6%. Consumer durable prices fell 5.0%, clothing prices fell 0.9% and household energy prices were down 0.1% compared to July 2005. (MTI-Eco)