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MNB measures of underlying inflation remain below core inflation

Analysis

Image by Jessica Fejos

In a monthly analysis released after publication of data from the Central Statistical Office (KSH) on January inflation on Tuesday, the National Bank of Hungary (MNB) said its measures of underlying inflation remained around 2%, below the level of core inflation, state news wire MTI reported.

As reported earlier Tuesday, consumer prices were 2.1% higher on average in January 2018 than in January 2017. Compared to the preceding month, consumer prices in January rose 0.3% on average.

Core inflation according to the KSH, which excludes volatile fuel and food prices, was up 2.5% year-on-year in January.

The MNBʼs own indicator for core inflation, excluding the effects of indirect taxes, fell to 2.2% in January, down from 2.3% in the previous month.

The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, dropped from 1.8% to 1.7%.

The indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15% a month, was unchanged at 2.2%.

The central bank noted that prices of market services fell slightly in January from the previous month, because of VAT rate reductions for internet and restaurant services. Excluding the tax changes, these prices rose by 0.4%, which is broadly consistent with the change in prices last year, it said.

Householdsʼ inflation expectations "remained at moderate levels" during the month, the MNB added.

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