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GKI lowers inflation projection further on govt price cuts

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.