Hungary: Inflation drops as tax effects fade away
February 14, 2013
In January, consumer prices rose 0.8% over the previous month, which was above the flat reading seen in December but below market expectations of a 1.1% increase. According to the statistical office, higher prices for food and motor fuels drove the monthly increase.
Despite the strong monthly increase, annual headline inflation fell from 5.0% in December to 3.7% in January, the lowest level since September 2011. The drop, which came in below market expectations of a 3.9% rate, was mainly driven by fading effects of last year's VAT increase. Meanwhile, the seasonally adjusted core inflation index, which excludes volatile items such as fresh food and fuel, added 0.5% over the previous month. Annual core inflation fell from 4.9% in December to 3.7%.
In its latest inflation report from December, the Central Bank projects inflation to end 2013 at 3.3% before moderating to 3.1% by the end of 2014.