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Consumer price growth back to September rate

Consumer prices in Hungary rose 2.5% year-on-year in November, the Central Statistical Office (KSH) said today. The pace of the increase accelerated from 2.2% in October and is back to the rate it was in September.

Food prices rose 3.4% and the price of tobacco and spirits jumped 7.1%. Clothing prices edged up 0.5% but consumer durable prices were 0.2% lower. Household energy prices increased 1.5%, the price of goods in the category that includes vehicle fuel climbed 2.9% and service prices were up 1%. Vehicle fuel prices rose 5.9%.

Core inflation, which excludes volatile fuel and food prices was up 2.7%. Inflation adjusted for a basket of goods and services used by pensioners was 2.5%. In a month-on-month comparison, CPI was 0.4%, boosted by a 3.3% increase in the price of vehicle fuel and a 1% rise in clothing prices.

In a monthly analysis of inflation developments released after the publication of the KSH data, the National Bank of Hungary (MNB) said its measures of underlying inflation developments continued to be at or around 2% and remained below the level of core inflation.

The indicator for core inflation excluding the effects of indirect taxes fell to 2.2% in November from 2.3% in the previous month. The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, dropped to 1.7% from 1.8%. The indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15% a month, edged up to 2.1% from 2%.

The MNB noted that inflation was mainly boosted by volatile items, such as food and energy, and the contribution of demand-sensitive products was largely unchanged from the previous month. Householdsʼ inflation expectations "remained at moderate levels" during the month, it added.

Sándor Jobbágy of the CIB Group told national news agency MTI that the effect of wage rises continues to appear more slowly than expected in the trend of inflation, mainly due to the demand on the housing market. He said full-year average inflation could be around 2.3-2.4% this year and slightly higher in 2018. Gergely Suppán of Takarékbank forecast 2.4% annual average inflation in 2017.

In January-November, consumer prices rose by 2.4% on average.