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Headline Inflation Falls to 5.5% Y/Y, Lowest in Over Two Years

HUNGARY
  • Consumer prices rose 5.5% y/y (Est: +5.9%) in December versus +7.9% in November, according to the Central Statistical Office, marking the lowest reading in more than two years. Month-on-month, prices fell 0.3% (Est: -0.2%) compared to flat the month prior. The seasonally adjusted core rate fell to 7.6% from 9.1%.
  • Among the CPI sub-categories, food prices increased by 4.8% y/y, while household energy prices went down by 13.9%. Services prices were up 12.4%, while consumer durables fell by 1.0%.
  • The faster-than-expected drop in the headline rate, along with the success in unlocking frozen EU monies, may add to pressure on the NBH to increase the pace of base rate easing from 75bps (note a 100bp option was considered in December). The central bank meet next on Jan 30.

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