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Hungary inflation falls to 8.8%

Inflation in Hungary was 8.8% year-on-year in April, a 0.2 percentage point drop from the previous month, the Central Statistical Office said on Friday.

Inflation had soared to 9% in March as a consequence of a government austerity package aimed at cutting the budget deficit, which at 9.2% in 2006 was by far the largest in percentage terms in the EU. Analysts had predicted that March's figure would be the inflationary peak, and many said that April's figures showed that inflation would now be likely to slowly decline. „Hungarian inflation has peaked but the decline over the coming months will be moderate,” said Nigel Rendell, from Calyon Bank in London. „We expect inflation to remain above 8% until at least August.” Hungary's central bank is aiming for inflation of around 5% by year-end, and most analysts believe this target will be achieved. The drop in inflation is also expected to prompt the bank to begin cutting interest rates before too long. The bank last year raised the main interest rate to 8% in an effort to combat inflation, and it has stayed at that level ever since. (