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Higher farm-gate prices to fuel inflation, analysts say

Farm-gate prices shooting up are likely to heighten inflationary pressure, analysts told MTI on Thursday.

Farm-gate prices rose 39.6% yr/yr in January after increasing 29.0% in December, the Central Statistical Office said Thursday morning.

György Barta of CIB Bank said that the rise in farm-gate prices would likely raise the cost of food, thus producing inflation. Barta said that the degree to which the rise in farm-gate prices increases the cost of food depends on how much of this rise agricultural producers can pass off onto processors. The CIB Bank lead analyst noted that the likely increase in the cost of food would not, therefore, be commensurate with the rise in farm-gate prices.

Zsigmond Gelencsér of the Buda-Cash Brokerage, like Barta, said that the increase in farm-gate prices would lead to higher food costs, adding that the rising cost of food and fuel could cause inflation. Gelencser noted that the higher cost of food and fuel has not yet manifested itself in core-inflation data. The Buda-Cash Brokerage analyst remarked that current wage dynamics in Hungary will curtail the potential rise in the cost of food in the country.