Hungary's monthly average gross wages rose more slowly in January than in the previous month, suggesting the central bank may come under less pressure to raise interest rates.
The average monthly wage was Ft209,418 ($1,135), rising 7.1% from the year-earlier period, the Budapest-based statistical office said today. The rate fell from 11.9% in December. Policy makers, who will meet to discuss rates on March 26, held off raising the benchmark borrowing cost from 8% last month, as they were divided over the outlook for wages. Inflation is the fastest in almost six years after the government raised regulated costs and the direction of consumer-price index hinges on the ability to contain wages, they said. „Wage developments over the coming months might be of crucial importance,” the bank said in a statement on March 14.„The uncertainty surrounding price and wage coordination remains significant. This is a major source of upward risk for the next two years.” The majority of policy makers on February 26 voted to keep the benchmark two-week deposit rate unchanged for the fourth month.
The bank that day forecast 7.4% average monthly inflation for this year, raising its previous 6.9% estimate, compared with an 8.8% rate in February. The forint weakened to 246.35 per euro by 9:44 a.m. in Budapest, from 245.84 late yesterday, which was an 18-month high. The currency is the world's second-best performer over the past month, behind the Slovak koruna, having gained 2.3% versus the euro. In January, wages for workers of private companies were 10.4% higher than a year earlier, while public-sector salaries, which included bonuses, were up 5.6% The number of Hungarians employed in January was 2.78 million, 1% more than a year earlier. The government shed 3.4% of its jobs in a year, reducing the number of public workers to 753,400. (Bloomberg)