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Analysts say monthly headline inflation decreased 0.4% in July

Analysts on average said consumer prices fell 0.1% in Hungary in July, but they still projected average annual inflation to rise to 5.5% for the full year from 3.9% in 2011, a poll by the financial daily Napi Gazdaság published on Monday shows.

The Central Statistics Office (KSH) will publish July inflation data on Tuesday. In June, consumer prices rose 0.1% a month and 5.6% year-on-year, accelerating from a 5.3% increase in May.

Seasonal food prices make the estimates uncertain, analysts told the daily. Zsolt Kondrát of MKB expected continued upward pressure from food prices but he said that the exchange rate and crude oil prices could affect the index either way.

Sándor Jobbágy of CIB Bank said consumer prices could have stagnated in July and rose on the year due to the lower base. Food prices fell less than usual for the season and the price of excise products and services could have moved up.

Inflationary pressure was lessened by the exchange rate and weak domestic demand, he said. Gergely Gabler of Equilor saw, in contrast, a steep 0.5% decrease on the month, bringing twelve-month inflation down to 5.3%.

He attributed the fall mainly to fuel and food prices and also to the strengthening of the forint. The analysts expected the National Bank of Hungary to keep its key rate on hold at 7.00% despite slower inflation, saying that even the doves on the Monetary Council seem to prefer waiting with the rate reduction until an agreement on IMF/EU financial assistance was sealed.