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CPI falls to 2.7% in December, under MNB mid-term target

Consumer prices in Hungary rose 2.7% year-on-year in December, continuing to slow after an acceleration that lasted for much of the year, show the latest data from the Central Statistical Office (KSH). Consumer prices were up 2.8% on average over the year 2018.

Headline CPI slowed from 3.1% in November, 3.8% in October, and 3.6% in September, all over the MNBʼs 3% mid-term target for "price stability."

December CPI was lifted by a 5.2% rise in the price of spirits and tobacco and a 4.7% increase in food prices. Household energy prices were up 1.2%, consumer durable prices edged up 0.5%, clothing prices increased 0.7%, and prices in the category of goods which includes vehicle fuel climbed 1.5%. Service prices increase 2.3%.

CPI harmonized for better comparison with other European Union member states stood at 2.8%. Core inflation, which excludes volatile food and fuel prices, was also 2.8%. CPI calculated with a basket of goods and services used by pensioners was likewise 2.8%.

In 2018 as a whole, consumer prices rose by 2.8% on average compared to the previous year.

The price of spirits and tobacco rose 5.6% for the full year of 2018, lifted by excise tax hikes. Food prices were up 4.2%, household energy prices increased 1.4%, clothing prices inched up 0.5%, and prices in the category of goods which includes vehicle fuel rose 3.8%. Service prices were up 1.6%, while consumer durable prices fell 0.4%.

Harmonized CPI was 2.9%, core inflation was 2.5%, and pensionersʼ CPI reached 2.7% in 2018 as a whole.

Underlying inflation steady - MNB

In its usual monthly analysis released after the publication of the KSH data, the National Bank of Hungary (MNB) attributed the slowdown in inflation to a decline in prices of fuel.  The central bank also said its measures of underlying inflation developments were broadly unchanged compared with the previous month. 

The MNBʼs indicator for core inflation, excluding the effects of indirect taxes, stood at 2.9% in December, rising from 2.7% in the previous month. 

The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, rose from 2.7% to 2.8%. 

The indicator for "sticky price inflation," which includes items for which retail prices vary, on average, no more than 15% a month, was flat at 3.1%. 

Householdsʼ inflation expectations "remained at moderate levels" in December, the central bank said.

Consumer price data for January 2019 will be published by the KSH on February 12.