The MNB assumed a per-barrel oil price of $106.4 for the year in the latest forecast, up from a $90.9 price in the previous forecast in February. It increased the projection for 2009 to $106.3 from $88.3. It raised its inflation projection for 2008 to 6.3% from 5.9%, and the projection for 2009 to 4.2% from 3.6%. The higher oil prices translate as higher fuel, energy and producer prices, the bank said. They could also bring higher centrally-regulated prices.

In keeping with its usual practice, the bank calculated the forecast using the base rate at the time the report was prepared: 8.25%. (The rate was raised to 8.50% on Monday.) The forecast also calculated with a slightly stronger HUF/EUR rate of 255.2, compared to a rate of Ft 256 in the February forecast. For 2009 and 2010, the bank’s forecast is based on HUF/EUR rates of 257.6 and 257.7, respectively.

In spite of the significant rise in its inflation forecast, the central bank puts core inflation at 5.1% for 2008, down a slight one-tenth of a percentage point from the February forecast. Though it raised the forecast for 2009 core inflation one-tenth of a percentage point to 3.7%. The report puts 2010 core inflation at 3.0%, level with headline inflation. The quarterly forecasts, however, show core inflation exceeding the 2.9% headline inflation forecast by one-tenth of a percentage point in Q2-Q4 2010. (MTI-Econews)