Hungarian Inflation Unexpectedly Accelerates on Tobacco, Banks
Hungarian inflation unexpectedly accelerated last month, driven by a jump in the cost of tobacco products and financial services.
Consumer prices increased 1.4 percent from Sept. 2012 after a 1.3 percent gain in August, the statistics office in Budapest said today. The median estimate of 19 economists polled by Bloomberg was 1.2 percent. Prices rose 0.5 percent in a month.
Prime Minister Viktor Orban cut utility prices, which helped keep the inflation rate below the central bank’s 3 percent target since February, and is preparing another round of reductions. Monetary-policy makers lowered borrowing costs for a 14th month in September, bringing the benchmark to a record-low 3.6 percent.
“There is no trend reversal in inflation and the index will go lower,” Zoltan Torok, a Budapest-based economist at Raiffeisen Bank International AG (RBI), said by phone. “This shouldn’t impact monetary policy.”
The forint was little changed at 294.86 per euro at 9:30 a.m. in Budapest. It has appreciated 1.7 percent in the past month, the second-best performance among 31 major currencies tracked by Bloomberg.
The Magyar Nemzeti Bank cut its benchmark rate 0.2 percentage point last month and said borrowing costs may decline further, citing the outlook for inflation, economic growth and the country’s risk perception, according to the minutes of the September meeting published Oct. 9.
“Subdued” inflation allows for loose monetary conditions in the medium-term and the benchmark rate may fall close to 3 percent, central bank President Gyorgy Matolcsy said Sept. 28.
Tobacco prices jumped 6.7 percent from the previous month, boosting the headline inflation rate by 0.3 percentage points while a 13.7 percent monthly surge in the cost of financial services drove inflation a further 0.1 percent, statistician Borbala Minary said today.
Household energy prices dropped 8.1 percent in September from the same month last year. Orban’s ruling Fidesz party plans to cut regulated household natural-gas, district-heating and electricity prices by 11.1 percent from Nov. 1 after a 10 percent reduction this year.
The core inflation rate, which strips out volatile items such as energy costs, rose to 3.5 percent from 3 percent.