Hungary CPI Edges Down to 1.7% in June

Hungary's annualised consumer price index fell to 1.7% to in June from 1.8% in the previous month, data released by the Central Statistical Office (KSH) on Tuesday, and reviewed by MTI, show.

Food prices inched up 0.2%, but fell 2.4% excluding the price of eating out. Pork prices fell 10.9% and potato prices dropped 7.6%. Household energy prices fell 2.3% as piped gas prices slipped 7.5% but electricity prices increased 2.3%. Consumer durable prices rose 1.9%.

Motor fuel prices increased 1.6%. The government rolled out petrol and diesel price caps for Hungarian motorists early in March. Prices of spirits and tobacco products increased 3.1% and clothing prices rose 1.4%. Service prices were up 4.0%.

CPI adjusted for better comparison with other European Union member states was 2.1%. Core inflation, which excludes volatile fuel and food prices, was 2.0%. The CPI calculated with a basket of goods and services used by pensioners was 1.4%.

In a month-on-month comparison, consumer prices were flat. Food prices, excluding the price of eating out, fell 0.5%. Service prices edged up 0.3%, household energy prices were up 0.4% and motor fuel prices stagnated.

Commenting on the data, ING Bank senior analyst Péter Virovácz said inflation had been held in check by the forint strengthening and declining food prices in the past two months. ING Bank expects inflation to return to around 3% by year-end. The lender's analysts put average annual inflation at 2.1%. Based on the June CPI data, Virovácz said he was certain of an interest rate cut next month and an August cut was also highly likely.

Erste Bank analyst János Nagy said the June inflation figure was a big surprise, adding that he could see no obstacles to further interest rate cuts. Erste Bank cut this year's inflation forecast to 2.4% last month, but another revision could follow soon.