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MNB: CPI steady, underlying inflation measures climb

Analysis

The National Bank of Hungaryʼs (MNB) “underlying measures of inflation” all rose at an accelerated pace in January, even as headline CPI remained steady, according to data published by the central bank today, MTI reported.

The indicator for core inflation, excluding indirect tax effects, was 1.3% in January, climbing from 1.1% in the previous month. The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, was 1.9%, rising from 1.5%; while the indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15% a month, was 2%, up from 1.7% in the previous month.

“The levels of the measures continue to indicate a restrained inflation environment,” the MNB said in a monthly assessment of the inflation data.

“Householdsʼ inflation expectations have been broadly unchanged since early 2015, remaining at moderate levels in line with low underlying inflation developments,” the central bank added.

Headline inflation was 0.9% year-on-year in January, the Central Statistical Office (KSH) said earlier today, level with the rate in December. Seasonally-adjusted core inflation was 1.5%.

The MNB said an increase in fuel prices, which rose on base effects, was countered by a fall in unprocessed food prices supported by a reduction in the VAT rate on pork.

The MNB also noted the impact of an increase in volatile airline ticket prices on non-durables prices in a month-on-month comparison. It attributed the month-on-month increase in service prices to higher insurance premiums.

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