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Analysts estimate slight CPI rise in November

Analysts polled for Monday's issue of business daily Napi Gazdaság estimate consumer prices rose 6.39% in November compared to the same month a year earlier, accelerating slightly from 6.3% in October.

The analysts said prices probably rose 0.22% in November compared to October, slowing from a 0.5% month-on-month increase in October. The Central Statistics Office (KSH) will publish its November inflation report on Tuesday. Analysts in the poll raised their year-end inflation forecast to 6.52% from 6.4% in the previous month, although they left the annual average inflation forecast unchanged at 3.9%.

They expect CPI to rise further in the H1 of 2007 and peak at 8.5%, before beginning to fall mid-year. The analysts argued that falling vehicle fuel prices would have little effect on inflation in November and December, but food prices would stabilize after a double-digit increase in October. They said a big rise in district heating prices would show up mostly in December, rather than in November. Also affecting December prices will be a low base due to pre-Christmas sales in 2005.

The analysts noted that the increase of Hungary's middle VAT rate from 15% to 20%, in line with the top rate, had caused prices to increase two-tenths of a percentage point more than earlier projected. The analysts put seasonally-adjusted core inflation at 4.1% in November, slowing from 4.1% in October, largely because of the strengthening forint. They estimate November core inflation was -0.1% compared to October, slowing from a 0.5% month-on-month increase in the previous month. (Mti-Eco)