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Analysts see twelve-month inflation to peak at 5.8% in January

Twelve-month inflation in Hungary topped at 5.8% in January, analysts surveyed by the business daily Napi Gazdaság agreed, blaming continued high inflation on steadily high fuel prices.

Hungary's Central Statistical Office (KSH) will publish January inflation data on February 12, Friday.

Twelve-month inflation rose to 5.6% in December when consumer prices were unchanged from November. Annual average inflation slowed to 4.2% in 2009 from 6.1% in 2008.

OTP analyst Győző Eppich estimated vehicle fuel prices rose 6% from December, partly on a rise in excise duty in January. This, with a low base in January 2009, continued to boost inflation last month. Elsewhere, recession continued to keep inflationary pressure low.

Post-Christmas sales could have partly offset the impact of rising fuel prices, and the reductions, affecting consumer durables and clothing, could be steeper than usual because of the crisis, said Daniel Bebesy of the fund manager Budapest Alapkezelő. He noted that fuel will no more push up inflation in February as fuel prices rose steeply and the forint also weakened dramatically in February 2009.

The January reduction of the VAT of distant heating to 5% will first appear in the February bills, and will reduce inflation then, Takarékbank analysts Gergely Suppan said, adding that a rise in public transport prices will have the opposite effect.

Analysts' forecast for the remainder of the year remained unchanged. They project twelve-month inflation to drop to or under the central bank midterm target of 3% in July as last July's tax rises, including a 5 percentage-point VAT rise leave the base, and stay there until the end of 2010.

Twelve-month inflation started to slow from above 6pc with the recession in the autumn of 2008, bottomed out at 2.9% in March 2009, and rose above 5% due to tax rises last July. (MTI-Econews)