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Wage growth bigger than expected, but unlikely to affect rate decision

Fresh data published by the Central Statistics Office (KSH) early Tuesday showed higher-than-expected wage growth in August, but analysts told MTI the data were unlikely to cause inflationary pressure and would not affect a decision by central bank rate-setters on next Monday.

Gross wage growth picked up to 1.9% in August from 0.3% in July, KSH said in the morning.

Erste Bank's Zoltán Árokszállási said private sector wages excluding premiums — a figure closely watched by rate-setters — also grew faster than expected, climbing 3.9% in August from 2.9% in July, but the increase could be attributed to the number of work days in the period among other factors. The increase is not enough to cause inflationary pressure, he added.

Gergely Suppán of TakarékBank said the rise in employment, especially in the private sector, was a positive sign and could augur a stabilisation of domestic demand.

The National Bank of Hungary's Monetary Council will hold a rate-setting meeting on October 25. They are expected to keep the base rate on hold at 5.25%.

Crisis taxes to be levied on energy suppliers, telecommunications companies and retail chains will not affect consumer prices in 2011, Suppán said. Retailers have little room to raise prices, but they could pass the burden of the tax on to wholesalers, he added.

Árokszállási said the crisis taxes could raise average annual CPI in 2011 by 0.2 percentage point.

The taxes are to raise HUF 161 billion in budget revenue in 2010 alone.

Suppán put average annual inflation in 2011 at 3%.

Árokszállási said it would reach 3.2%. (MTI-Econews)