Consumer prices in Hungary dropped by an annual 0.9% in December, the Central Statistical Office (KSH) said this week. Emerging market analysts in London had expected a reading in December of -0.4%. Consumer prices fell by 0.7% in November and 0.2% on average in 2014. In a month-on-month comparison, prices eased by 0.7%, KSH said. The Ministry of National Economy said the -0.2% figure met its projections. Families and pensioners had benefitted most from the government’s success at reducing inflation, which had resulted in increased purchasing power for wages and pensions, it said. A major drop in fuel prices had been among the factors that influenced inflation in December, and the largest price drop of 11.7% in the full year was for household energy. Analysts told state news agency MTI that consumer inflation was dragged down by falling fuel and food prices in December, adding that deflation could continue for several months. They said the National Bank may consider relaunching rate cuts. Senior analyst Gergely Ürmössy of Erste Bank said it had reduced its 2015 inflation forecast to 0.4% in the light of the December figure. Ürmössy expects the central bank to change its communication after the March inflation forecast in order to prepare the ground for another series of rate cuts. Senior analyst András Balatoni of ING Bank said price expectations continue to lessen both in the service and industrial sectors, which shows that lower fuel and food prices have a secondary effect, causing a general decline in consumer prices. The analyst said the weaker forint exchange rate is here to stay, predicting a rate of EUR 315-324 for the next one-two months.
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