MNB projects accelerating core inflation

MNB

The National Bank of Hungary reduced its projections for core inflation, which excludes volatile fuel and food prices, in a quarterly Inflation Report published on Thursday, but it still sees an acceleration in prices next year.

The MNB cut its projection for 2015 core inflation to 1.4% from the 1.5% noted in the previous report published in June. It reduced the forecast for 2016 to 2.5% from 2.8%.

Core inflation is likely to pick up gradually as costs continue to slowly increase from low levels and as a result of an expansion in domestic demand and an increase in wages, the MNB said in the report.

The MNB cut its forecast for core inflation excluding the indirect effect of taxes to 1.2% from 1.3% for 2015, and to 2.2% from 2.4% for 2016.

Core inflation excluding indirect taxes will gradually rise from its currently low value due to a slight increase in costs as well as recovering demand and improving labor market developments, the central bank said.

The MNB said on Tuesday that it had lowered its headline inflation forecast for 2015 to 0.0% from 0.3% in the fresh report. The projection for 2016 CPI was lowered to 1.9% from 2.4%.

The MNB also lowered its forecast for GDP growth this year by 0.1 percentage point to 3.2%. It left the projection for 2016 GDP growth unchanged at 2.5%.

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