Hungary's consumer prices rose 0.9% year on year in November, just like in October, the Central Statistical Office (KSH) has reported on Wednesday. The market consensus in a Portfolio.hu poll was also for a 0.9% yr/yr CPI. Core inflation rose slightly to 3.5%.
"Beside the decreased prices of electricity, gas and other fuels, as well as motor fuels, consumer durable goods, clothing and footwear, price rise was observed in case of alcoholic beverages and tobacco as well as services," the KSH commented.
Hungary’s inflation caused a major downside surprise in October, dropping to below 1%, as - contrary to expectations -the new tobacco shop regime and the related hike of the profit margin of tobacco products did not make an impact on consumer prices and the benign weather conditions allowed food price inflation to remain modest too.
Fuel prices also dropped in November and there could have been subdued price increases at non-food products and consumer durables too.
As expected, the second round of utility tariff cuts (as of 1 Nov) did not yet make an impact on the index.
The stats office explicitly said in the report that “in case of natural gas and electricity the 10% price reduction in November will appear in consumer price index of December and in case of purchased heating the price reduction will be entered into the index from November to January. The reason is that according to the existing practice the price change is entered into the consumer price index when consumers have to pay the new fees."
The data published today show that the rise in food prices was especially subdued (0.4% yr/yr), whereas the price increase in alcoholic beverages and tobacco did not pick up, i.e. the new tobacco shop regime and the hiked margin did not cause the price rise that was expected. A part of this was likely swallowed by the producers, i.e. they have not yet adjusted their prices to the hike. The price rise in consumer durables was muted as projected; household energy prices decreased 0.5% m/m.
While the headline inflation figure is at its lowest in several decades, core inflation rose in November and was up 0.4% m/m and 3.5% yr/yr. This indicates that adjusted for more volatile good such as food, energy, etc. Hungary’s inflation would be close to or above the central bank’s medium-term target. Consequently, when the impact of the utility tariff reductions (at least of those implemented up to this point) drop out of the index towards the end of next year, the headline figure could rise back to this level.
Monthly changes
In November 2013 compared to the previous month consumer prices decreased by 0.1%. In case of food price decrease was observed (0.1%) as well. Within the group price decrease was measured in case of edible oil (4.9%), flour (4.8%), sugar and seasonal food items i.e. potatoes, fresh vegetables, fruits (2.1-2.1%) and pork (1.7%). Prise rise was observed in case of cheese (2.0%), pasta products (1.6%) and milk (1.0%). The price rise of alcoholic beverages and tobacco was the highest (1.0%). In case of clothing and footwear prices grew by 0.8% mainly due to the seasonal changes.
Slight price rise was measured in case of services (0.2%). In case of electricity, gas and other fuels prices decreased by 1.4% at a rate higher than the average. In case of other goods (including household and pharmaceutical products, as well as motor fuels and recreational goods) the price decrease was 0.5%. Within other goods consumer paid 1.9% less for motor fuels. Prices of consumer durable goods decreased slightly, by 0.1%.
Annual changes
In November 2013 compared to November 2012 food prices grew by 0.4% at a rate lower than the average. In this category price increase was observed in case of cheese (8.2%), milk (6.0%) and pork (2.2%). Price decrease was observed in case of flour (17.6%), egg (13.7%) and sugar (11.5 %). The price rise of alcoholic beverages and tobacco was higher than the average (10.6%). The price increase of services was higher than the average as well (4.0%), prices of water charges, sewerage disposal and refuse disposal decreased about 11% in average, local transport grew by 4.9%. Consumers paid 1.8% less for consumer durable goods, 1.2% less for clothing and footwear and 0.4% less for other goods.
Within other goods 2.7% price decrease was measured for motor fuels. In case of electricity, gas and other fuels prices decreased by 10.3%. Price decrease was observed in case of purchased heat (17.7%), natural gas (10.9%) and electricity (10.3%) compared to the corresponding month of the previous year.
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