Lower than expected inflation in February

140311_CPI_ENA key role in the latter was supposedly played by the 0.3% m-o-m drop in services prices, probably partially due to free money withdrawal from bank accounts, introduced by the government from February. Food prices rose by 0.2% m-o-m whereas gasoline prices increased by as much as 1.5% in comparison to January. Monthly core inflation, for the first time since May 2012, fell into negative territory, attaining -0.1%. Annual core inflation slowed to 2.8%, down from 3.4% in January. (Actually, 2.8% was the lowest annual core inflation print last year, registered in July.)

As a result of the lower than expected inflation in February, annual average CPI in 2014 is now seen to attain only 0,9%, down from 1.2% previously forecasted by Kopint-Tárki. Yet, as a result of base effects and the diminishing impact of administrative price cuts towards the year-end, year-on-year CPI in December is expected to reach 2.5% while annual average inflation in 2015 is seen to climb up to 2.8%. The weak forint carries an upward risk to inflationary developments but we have not yet quantified this in our calculations.