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Consumer price inflation steady at 3.4% in August

Consumer prices were 3.4% higher on average in August 2018 than a year earlier. Significant price increases were measured over the past year for motor fuels and tobacco, according to monthly data from the Central Statistical Office (KSH).

In August 2018 compared to August 2017, food prices rose by 4.1%, within which prices of seasonal food items (potatoes, fresh vegetables and fruit) rose 14.5%, butter 8.4%, eggs 7.5%, milk 6.0%, and flour 5.1%, while the price of sugar was 23.6% lower.

The highest price increase of 7.1% on average was recorded for other goods (pharmaceutical products, motor fuels, household products, and recreational goods), within which consumers paid 16.3% more for motor fuels. The average price of alcoholic beverages and tobacco was up by 4.6%, within which the tobacco price rose by 6.2%.

Electricity, gas and other fuels were 1.6% more expensive. Clothing and footwear prices were unchanged, while consumers paid 0.2% less for consumer durables.

Seasonally adjusted core inflation, which excludes volatile fuel and food prices, was 2.2% in August, slowing from 2.4% in July.

Calculating with a basket of goods and services used by pensioners, inflation was 3.0%. Excluding the effect of tax changes, consumer prices rose 3.8% year-on-year, the same as the rate in July.

In August 2018 compared to the preceding month, consumer prices were up by 0.1% on average.

In January–August 2018, compared to the first eight months of 2017, consumer prices increased by 2.6% on average.

Underlying inflation unchanged

In a monthly analysis released after publication of the KSH data, the National Bank of Hungary (MNB) said its measures of underlying inflation were unchanged in August from the previous month.

The indicator for core inflation, excluding the effects of indirect taxes, stood at 2.3% in August, edging down from 2.4% in the previous month.  The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, was flat at 2.3%. 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 unchanged at 2.7%.

"The decline in core inflation was offset by an increase in volatile unprocessed food prices in the month," the MNB said. "The [MNBʼs] June projection is for inflation to fall back gradually from the autumn months of 2018," it added.

Householdsʼ inflation expectations "remained at moderate levels" in August, the central bank noted.

Consumer prices for September 2018 will be published on October 9.