Consumer Price Index Falls to 1.2% in July

Hungary's annualised consumer price index fell to 1.2% in July from 1.7% in the previous month, data released by the Central Statistics Office (KSH) on Friday show.

Food prices dropped 1.1% and fell 4.4% excluding the price of eating out. Pork prices declined 13.1% and fresh fruit prices dropped 12.5%, but cooking oil prices rose 3.8%.

Household energy prices fell 4.3% as piped gas prices slipped 10.9% but electricity prices increased 1.5%.

Consumer durable prices rose 1.8%. Motor fuel prices edged down 0.1%.

Prices of spirits and tobacco products increased 2.9% and clothing prices inched up 0.6%. Service prices were up 4.7%.

CPI adjusted for better comparison with other European Union member states was 1.6%.

Core inflation, which excludes volatile fuel and food prices, was 1.9%.

The CPI calculated with a basket of goods and services used by pensioners was 0.8%.

In a month-on-month comparison, consumer prices edged down 0.1%. Food prices, excluding the price of eating out, fell 1.7%. Service prices rose 1.6%, household energy prices dropped 0.9% and motor fuel prices fell 1.3%.

Prime Minister Peter Magyar said inflation had fallen to a ten-year low in a post on Facebook after the release of the data.

He acknowledged the stronger forint among the factors that brought the CPI down and noted that food prices had dropped "for the first time in a long while".

Erste Bank chief analyst Orsolya Nyeste said the drop in CPI had exceeded expectations and highlighted the fall in food prices, in spite of the drought and an increase in the price of commodities due to the Iranian war. She added that service prices had been lifted by summer accommodations and by the end of a "voluntary" price freeze by banks and telecommunications companies at the end of June.

Nyeste said CPI may have bottomed out in July and could edge higher in August. She put year-end CPI under the National Bank of Hungary's 3% mid-term inflation target.

Hungary's National Commerce Association (OKSZ) pressed for the rollback of caps on margins for food products in light of the the fresh data. It argued that the measure had had no impact on prices since May, rather prices were impacted by trends on external and internal markets as well as the stronger forint.