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CPI set to rise further on higher food, fuel prices, analysts say

Higher food and fuel prices are likely to cause Hungary's consumer price index to continue to rise in the coming months, analysts told MTI on Tuesday, after the Central Statistics Office (KSH) published fresh data.

Hungary's year-on-year CPI climbed to 6.0% in August from 5.8% in July, KSH said early Tuesday.

TakarékBank analyst Gergely Suppan said the higher CPI came as no surprise and added that higher wheat and maize prices could lift the index over 6% in the coming months too. CPI will probably fall close to 5.5% from November as the effect of an excise tax rise falls out of the base period and drop further from January as the effect of a VAT hike falls out of the base, he said. He put average annual CPI a little over 4% for 2013, but said the central bank's 3% "price stability" target would not be reached until the beginning of 2014.

Rate-setters should remain cautious in the coming months because of growing inflationary risks and uncertainty about Hungary's credit talks with the IMF, he said. He projected another 25bp rate cut to 6.50% by year-end -- after a surprise loosening in August -- and said the rate could drop to 6.00% by the end of next year.

Erste Bank's Orsolya Nyeste said food and fuel prices would probably lift CPI to 6.5-6.6% in September before falling to 5.4-5.5% by December. She put average annual inflation around 5.8% for 2013 and 4% for 2014.