Hungary: Inflation steps up in June
July 11, 2013
In June, consumer prices rose 0.2% over the previous month, which is above market expectations of a 0.1% increase and in contrast with the 0.1% fall recorded in May. According to the statistical office, the monthly rise was driven by higher prices for services and food.
As a result of the monthly rise, annual headline inflation rose from 1.8% in May to 1.9% in June, slightly above market expectations of 1.8%. Despite the annual rise, inflation still sits below the Central Bank's lower tolerance bound of 3% plus/minus 1 percentage points. Going forward, as inflation remains below the Central Bank's target, the Bank will have more room to engage in further monetary easing.
Meanwhile, the core inflation index, which excludes volatile items such as fresh food and fuel, rose 0.05% over the previous month. Annual core inflation dropped from 3.3% May to 3.0% in June.
In its latest inflation report from June, the Central Bank projects inflation to end 2013 at 2.1% and to rise to 3.2% by the end of 2014. FocusEconomics panellists see year-end inflation at 3.3%, which is down 0.3 percentage points over last month's projection. Next year, the panel expects inflation to move up to 3.4%.