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Consumer inflation decelerates to 3.1% in August

Consumer prices were 3.1% higher on average in August 2019 than a year earlier, down from 3.3% year-on-year in July, show monthly data from the Central Statistical Office (KSH). Significant price rises were measured for alcoholic drinks and tobacco, as well as food.

Food prices went up by 5.6% in August 2019, compared to August 2018, within which prices of seasonal food items (potatoes, fresh vegetables and fruit) rose 13.7%. Pork prices rose 11.5%, the price of flour 11.3%, and the price of bread 8.4%, while milk prices were 5.2% lower year-on-year.

Prices of alcoholic beverages and tobacco rose by 8.8% on average year-on-year, within which tobacco prices rose 12.8%. Consumers paid 2.8% more for services, within which rents increased by 10.0%.

The price of motor fuels was reduced by 2.6% year-on-year in August. Clothing prices rose 1.8%, consumer durable prices fell 1.4%, and household energy prices increased 1.0%.

CPI harmonized for better comparison with other European Union Member States was 3.2% in August. Seasonally adjusted core inflation, which excludes volatile fuel and food prices, was up 3.7%. Inflation calculated using a basket of goods and services used by pensioners stood at 3.4%.

In a month-on-month comparison, consumer prices fell by 0.1% on average in August compared to July.

In January–August 2019, compared to the first eight months of the previous year, consumer prices went up by 3.4% on average.   

Underlying inflation steady at 3.2%

In its customary monthly analysis released after the publication of the KSH data, the National Bank of Hungary (MNB) attributed the drop in headline inflation mainly to a drop in the price index for unprocessed food.

The MNBʼs measure of core inflation excluding indirect tax effects - what state news agency MTI describes as a bellwether indicator of underlying inflation - was 3.2% in August, level with the previous month.

After its monthly rate-setting meeting in August, central bank policy-makers said core inflation excluding indirect tax effects "is likely to decline gradually to 3% from the end of 2019" because of a "strengthening of disinflationary effects."

The monthly analysis shows the central bankʼs indicator for demand-sensitive inflation, which excludes processed foods from core inflation, stood at 2.9%, also unchanged from the previous month. The indicator for sticky price inflation, which includes items for which retail prices vary, on average, by no more than 15% a month, was also steady, at 3.4%.

The MNB said householdsʼ inflation expectations "remained moderate, at a level consistent with the 3% inflation target" in August.

Consumer prices for September 2019 will be published on October 8.