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Analysts say Hungary's April inflation rate surprisingly high

Central Statistical Office (KSH) data showing Hungary's 12-month consumer-price inflation rate to have been 3.4% in April took analysts by surprise, some of them speculating that CPI could rise as high as 5%-6% following the July hike in value-added and excise taxes.

Analysts had expected 12-month consumer-price inflation of 3.0% in April.

Gergely Suppan of Takarékbank attributed the Hungary's surprisingly high April consumer-price inflation primarily to the forint's weakening during the month, adding that analysts had long expected the Hungarian currency's previous weakening to manifest itself in inflation rates.

Orsolya Nyeste of Erste Bank commented that the impact of forint's April weakening exercised a greater-than-expected impact on inflation during the month, noting that the forint's weakening underpinned the rise in prices for durable consumer-goods, services, clothing and airline tickets.

Suppan remarked that a rise in service prices offset a decline in the cost of food in April, noting that although the price of fuel continued to fall in year-on-year terms during the month, it declined to a lesser magnitude in April than in March. Rising drug prices also had an effect, he said.

Takarékbank analyst predicted that a rise in VAT and excise-tax rates in July could propel Hungary's consumer-price inflation rate to between 6% and 7%, adding that if all cost increases are passed on to consumers, CPI would rise by 4.1 percentage points, though this is unlikely to take place, except for regulated or fuel prices.

Suppan forecast December twelve-month consumer-price inflation of around 6%.

Nyeste said that the July tax hikes would push CPI up to only slightly over 5%, but she did not exclude twelve-month inflation as high as around 7% in December. The Erste Bank analyst predicted that Hungary's average 2009 consumer-price inflation rate would be between 4.5% and 4.7%. (MTI – Econews)