Hungary: Inflation plunges further in April
May 14, 2013
In April, consumer prices rose 0.3% over the previous month, matching the increase recorded in March. The reading was in line with market expectations that predicted an increase of 0.3%. According to the statistical office, higher prices for clothing and footwear as well as for food were behind the monthly increase.
Despite the monthly rise, annual headline inflation fell from 2.2% in March to 1.7% in April, in line with predictions by the market and marked the slowest rate since June 1974. Following the April drop, inflation now sits below the Central Bank's lower tolerance bound. 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, as inflation keeps maintaining its downward trend, the Central Bank will have 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 0.4% over the previous month. Annual core inflation fell from 3.4% in March to 3.2%.
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 3.3%, which is down 0.3 percentage points over last month's projection. Next year, the panel expects inflation to move up to 3.4%.