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Consumer price growth continues to slow

Consumer prices in Hungary rose 2.2% year-on-year in October, slowing from 2.5% in the previous month, according to a first release of monthly consumer price data published by the Central Statistical Office (KSH) on Thursday.

In October 2017 compared to the same month of 2016, food prices rose 3.3%, within which the price of butter rose 17.3%, cheese 8.1%, pork 6.4%, bread 6.0%, coffee 5.6%, other meat preparations 5.3% and eggs 4.6%. The price of poultry meat fell by 12.8%.

The highest year-on-year price rise of 6.8% on average was recorded for alcoholic beverages and tobacco.

Clothing prices edged up 0.3% and consumer durable prices were 0.1% higher. Household energy prices increased 1.3%, while the prices of "other goods" (pharmaceutical products, motor fuels, household products and recreational goods) were up by 0.8% on average, within which the price of motor fuels alone rose by 1.3%. Service prices went up by 1.6%.

In October 2017 compared to the preceding month, consumer prices increased by 0.3% on average. Food prices rose by 0.5%, clothing and footwear by 1.7% (due to seasonal changes), and alcoholic beverages and tobacco by 1.0% on average. Electricity, gas and other fuels became 0.4% more expensive month-on-month.

In the period January–October 2017, compared to the equivalent ten-month period of the previous year, consumer prices rose by 2.4% on average.

Core inflation, which excludes volatile fuel and food prices, was up 2.7% year-on-year in October. Inflation adjusted for a basket of goods and services used by pensioners was 2.4%.

Consumer price data for November 2017 will be published by the KSH on December 8.

Underlying inflation below core - MNB

In a monthly analysis of inflation developments released after the publication of the KSH data, cited by state news wire MTI, the National Bank of Hungary (MNB) said its measures of underlying inflation continue to be "significantly below" the level of core inflation.

The MNBʼs indicator for core inflation, excluding the effects of indirect taxes, fell to 2.3% in October, down from 2.6% in the previous month.

The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, dropped from 2.0% to 1.8%.

The indicator for sticky price inflation, which includes items for which retail prices vary, on average, by no more than 15% a month, slipped from 2.3% to 2.0%.

The MNB noted that volatile items, such as food and energy, and demand-sensitive products contributed "nearly equally" to the increase in prices in October.

Household inflation expectations "remained at moderate levels" during the month, the central bank added.