For July analysts had expected a 3.8% rise in consumer prices, as the increase in VAT last July boosted the base figure, which ceased to affect this years data.

Analysts said rising food and energy prices explain the higher July inflation. Food prices rose 2.8% year-on-year but some seasonal products saw double-digit increases. Energy prices on average rose by 9.4% in July.

Weak domestic demand was reflected in the decline in the price of high-ticket items.

Durable consumer good prices fell for the fifth consecutive month, this time 0.1%, compared to June. Clothing prices dropped because of summer sales and discounts, but the price of services went up.

The biggest risks in the inflation path for the upcoming few months are food prices, analysts claim. Rising fruit and crop prices could add one-fifth of a percentage point to the inflation rate, Concorde economist Janos Samu said.

Higher food prices and their knock-on effect on the consumer price index is not likely to influence the MNB regarding monetary policy, Napi Gazdasag quotes analysts as saying.

Risk assessment remains the key factor for the MNB, Raiffeisen analyst Zoltan Torok said. Analysts’ year-end inflation forecasts range from 3.5% to 4.3%, depending on other factors, such as the forint's exchange rate.

Last month seasonally-adjusted core inflation stayed at 0.1%, while the pensioners consumer price index showed an increase of 0.1% from June and a year-on-year rise of 4.2%."

Source: Hungary Around the Clock.

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