Hungary: Inflation grows at slowest rate in nearly four decades
April 11, 2013
In March, consumer prices increased 0.3% over the previous month, which contrasted the 0.1% drop seen in February. The reading was below market expectations that predicted an increase of 0.5%. According to the statistical office, higher prices for clothing and footwear as well as for recreation and culture were behind the monthly increase.
Despite the monthly rise, annual headline inflation fell from 2.8% in February to 2.2% in March, which was below the 2.5% expected by the market and marks the slowest rate since September 1974. Following the March drop, inflation is closely approaching the lower bound of the Central Bank's tolerance margin of plus/minus 1.0 percentage points around the 3.0% target. A lower energy bill, stemming from a 10% cut in household energy prices approved by the government in December last year, has largely contributed to the slowdown seen in annual inflation in recent months. Going forward, low inflation gives the Central Bank more room to engage in further monetary easing.
Meanwhile, the seasonally adjusted core inflation index, which excludes volatile items such as fresh food and fuel, added 0.3% over the previous month. Annual core inflation fell from 3.6% in February to 3.4%.
In its latest inflation report from March, the Central Bank projects inflation to end 2013 at 2.6%, and to rise to 2.8% by the end of 2014. FocusEconomics panellists see year-end inflation at 3.6%, which is down 0.3 percentage points over last month's projection. Next year, the panel expects inflation to moderate to 3.4%.