Bloomberg News

Hungary’s Inflation Rate Rises to 7-Month High on Fuel Prices

December 14, 2011

Dec. 13 (Bloomberg) -- Hungary’s inflation rate rose more than economists forecast in November as the forint’s plunge and a tax increase raised fuel costs.

Consumer prices rose 4.3 percent from a year earlier, the most since April, after a 3.9 percent increase in October, the statistics office in Budapest said today. The median estimate of 17 analysts surveyed was 4.2 percent. Prices rose 0.7 percent from October.

“The forint’s underperformance and excise tax increases raised the cost of fuel while food prices also rose substantially,” statistician Borbala Minary told reporters.

The forint has been the world’s worst-performing currency in the second half of this year, weakening 13 percent against the euro. A depreciating forint boosts inflation risks, central bank President Andras Simor said on Oct. 25.

The central bank raised its benchmark interest rate last month to 6.5 percent, the highest in the European Union, from 6 percent to protect the forint after the country’s sovereign credit rating was downgraded to junk at Moody’s Investors Service.

Policy makers are ready to increase borrowing costs if the outlook for inflation and the country’s risk perception remain “persistently unfavorable,” the Monetary Council said after the rate decision.

Core inflation, which strips out volatile food and energy prices, was 3.1 percent in November. Motor fuels cost 8.6 percent more than a year earlier and consumers paid 5.1 percent more for food. Household energy prices rose 6.3 percent from a year ago after a 5.9 percent increase in October.

--Editors: Balazs Penz, James M. Gomez

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net -0- Dec/13/2011 08:00 GMT


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