Economic research company GKI now expects inflation to slow even further than before this year because of government reductions of household utilities prices.
GKI said in a fresh projection on Monday that average annual inflation would fall to 4.5% this year from 5.7% in 2012. GKI knocked down its projection for average annual inflation from 5.5% to 5% in mid-December, after the government announced a 10% reduction in household energy prices. In January, the government said water, sewage and rubbish pickup fees could also be cut. GKI forecasts real wages will rise about 1% this year.
GKI expects Hungary's economy will stagnate this year. It sees industrial output climbing 1% but domestic consumption edging down about 0.5%. Exports are set to rise 5% while imports climb 4.5%, according to GKI. It puts the unemployment rate at 10.7%, level with the rate in 2012. GKI calculates with a HUF/EUR exchange rate of about 285.
It sees the general government deficit rising to HUF 800 billion in 2013 from HUF 607.5 billion in 2012.