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Inflation steady at 3.9% in May

Hungaryʼs 12-month consumer price index (CPI) stood at 3.9% in May, level with the rate in the previous month, the Central Statistical Office (KSH) said on Friday. In January–May, compared to the first five months of 2018, consumer prices went up by 3.5% on average.

Food prices were up by 5.6% year-on-year in May, within which seasonal food items (potatoes, fresh vegetables and fruit) became 15.2% dearer, while the price of flour rose by 9.8%, pork by 8.8%, and bread by 7.1%. Egg and milk prices both fell 6.0%. Prices of alcoholic beverages and tobacco rose by 8.6% on average, within which tobacco prices rose by 12.6%.

Consumers paid 3.0% more for services, within which recreational services became 6.9% dearer. Motor fuel became 5.8% more expensive. Household energy prices rose 1.2%.

Compared to the preceding month, May consumer prices increased by 0.7% on average, with a monthly rise of 3.1% in fuel prices.

Seasonally adjusted core inflation, which excludes volatile food and fuel prices, stood at 4.0% in May. Harmonized for better comparison with other EU member states, CPI also reached 4.0%.

Calculating with a basket of goods and services used by pensioners, inflation was 3.8% in May.

Consumer price figures for June, and for the first half of the year, will be published on July 9.

Underlying inflation at 3.7% - MNB

In its customary monthly analysis released after the publication of the KSH data, the National Bank of Hungary (MNB) attributed the rise in core inflation to a rise in the prices of market services and processed food.

The MNB acknowledged that its measure of core inflation excluding indirect tax effects - a bellwether indicator of underlying inflation, noted state news wire MTI - rose by 0.3 of a percentage point to 3.7% in May.

The central bankʼs indicator for demand-sensitive inflation, which excludes processed foods from core inflation, stood at 3.6%, rising from 3.4% in the previous month.

The indicator for "sticky price" inflation, which includes items for which retail prices vary, on average, by no more than 15% a month, rose from 3.7% to 3.9%.

The central bank said that householdsʼ inflation expectations "remained at moderate levels" in May.

After their monthly rate-setting meeting in May, MNB policy-makers said inflation "will fluctuate around" the 3% central bank target in the coming quarters, while the measure of core inflation excluding indirect tax effects is "expected to continue to rise until the autumn months and then to decline from the end of 2019."