CPI to Climb Temporarily on Costlier Service Prices, Base Effects

MNB

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The Consumer Price Index, which has fallen into the central bank's 2-4% tolerance band for the past two months, will rise temporarily in the middle of the year because of base effects and higher market service prices, the National Bank of Hungary (MNB) said in a report published on its website Thursday. 

Price rises in sectors such as telecommunications and banking that businesses have put off until now will drive the CPI higher in the middle of the year, András Balatoni, an MNB director, said in presenting the fresh quarterly Inflation Report. 

Fielding questions, he said CPI would rise "closer to 5% than 4%" on the impact of the base effects and earlier delayed price increases. He noted that although headline CPI had been in the tolerance band, underlying inflation indicators still stood over the band's upper threshold. 

Balatoni pointed to two opposing effects on underlying developments: a rise in imported inflation resulting from the weakening of the forint and the disinflationary impact of the weaker cyclical position of the domestic economy.

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