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Analysts say August CPI data better than expected

Hungary's August CPI data published on Friday was better than expected, analysts told MTI, adding that inflation does not justify a central bank rate rise.

The Central Statistics Office reported on Friday morning that consumer prices increased 3.7% YoY and fell 0.6% MoM in August.

Takarékbank analyst Gergely Suppan said that there is no evidence of the earlier predicted inflationary pressure on the Hungarian economy. Although food prices fell less than a year earlier, they still came as a surprise with analysts previously forecasting a jump. Suppán noted that weak domestic demand offsets the inflationary effects of the weak forint. He attributed the rise in the price of services to the summer vacation season, adding that the August inflation data would not serve to justify a hike in the central bank base rate.

Balint Torok of Buda-Cash Brokerage speculated that the inflation-moderating YoY effect of Hungary's five-percentage-point VAT increase on July 1 2009 may have manifested itself in August as well as in July. Török believes, however, that food prices would continue to rise in YoY terms and the weakening of the forint may be reflected in Hungary's inflation data over the coming months. Torok noted that although core inflation rose in August from July, it was still far too low to be a cause for concern. (MTI Econews)