Hungary's monthly average gross wages rose faster in December than economists had expected, which may put pressure on the central bank to raise interest rates.
The average monthly wage was Ft 201,321 ($1,054), rising 11.9% from the year-earlier period, the Budapest-based statistical office said today. Economists in a Bloomberg survey had a median forecast of 7% annual increase. Wages for the full year of 2006 were 8.1% higher than in 2005. Central bank policy makers, who will meet to discuss interest rates on February 26, held off raising the 8% benchmark last month as they were divided over the outlook for wage increases. Inflation is the fastest in more than five years after regulated price increases and the path of the consumer price index hinges on the ability to contain wages, they said. „Some factors that determine the price paths, such as consumer demand, the forint's exchange rate and the price of crude oil point toward moderation, while the pace of wage inflation is higher than expected.” Henrik Auth, a central bank vice president who voted to increase rates, said after the policy meeting on January 22. The majority then voted to keep the benchmark two-week deposit rate at 8%, unchanged for a third month at the European Union's highest along with Romania. The bank on February 16 predicted the annual inflation rate may rise to as much as 9% this year, compared with 7.8% in January.
The forint weakened to 251.68 per euro by 9:23 a.m. in Budapest, after trading at 251.13, near a year-high, before the report. The currency is the world's best-performer over the past six months, having gained 10.6% against the euro. In December, wages at the workers of private companies were 11.3% higher than a year earlier, while public-sector salaries were up 2.3%. For the year, corporate increases of 8.5% compared with 6% for government workers. The number of Hungarians employed in December was 2.76 million, 0.1% less than a year earlier. The government shed 3.2% of its jobs in a year, reducing the number of public workers to 764,200. (Bloomberg)