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Hungary: August CPI in line with expectations

August consumer price inflation figures published on Thursday were in line with expectations and could point to a slowing trend, analysts polled by MTI said.

Twelve-month CPI slowed to 6.5% in August, slowing from 6.7% in July, the Central Statistics Office (KSH) said in the morning. The figure was slightly under the 6.6% estimate of analysts polled by business daily Napi Gazdaság.

CIB Bank chief analyst Mariann Trippon said the August CPI was more or less in line with expectations. She attributed the slowdown to cheaper seasonal food and end-of-summer markdowns on clothing. Service prices also remained stable, she added. All of these factors countered a rise in household gas prices.

The trends in the August figures bolster expectations that CPI will continue to slow in the coming months, Ms Trippon said. September CPI could fall even more, in part because of a high base. She put twelve-month December CPI at 5.3% and projected a 25bp base rate cut in the same month. Rate cuts should follow in 2009, she added.

Tamás Kopik chief researcher at economic think tank GKI said the August CPI was practically the same as analysts’ consensus. He put down the drop in CPI to a fall in the price of seasonal food, durables and fuel. A bigger harvest will keep the price of food down for the rest of the year, he added.

Next year, CPI is likely to continue to fall, especially if commodities and energy price inflation slows as expected, Kopik said. The state and local councils are likely to hold back on price rises in the run-up to the next general elections, which will also keep CPI down, he added. (MTI-Econews)