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Hungarian inflation hits expected peak of 9%

Hungary's Central Statistical Office (KSH) on Wednesday announced that consumer prices had risen 9% year-on-year in March, the month that many had predicted would see a peak in inflationary pressures caused by a government austerity package

Prices rose by 0.8% compared to the previous month, while core inflation rose by 6% year-on-year. Inflation has been steadily rising since the government last year introduced an austerity package aimed at cutting the nation's huge budget deficit, which is around 10% of GDP for 2006. The central bank has said it expected inflation to peak at around 9% before falling away, and analysts said they believe that March's figure represented the highest inflation level. „Inflation has probably peaked...we expect a decline in headline CPI to around 5% by the end of the year,” said István Zsoldos of Goldman Sachs in London. The central bank raised interest rates by 200 basis points to 8% to help combat inflation, and analysts now predict the bank will begin cutting again over the next few months. (