London-based emerging market analysts had expected CPI to climb by over 2 percent on the back of a substantial base effect in energy prices.

The National Bank of Hungary said after the release that its measures of underlying inflation “did not indicate any significant change compared to the previous month” in spite of the 0.5 percent rise.

Headline inflation rose mainly on higher fuel prices and in part on base effects, the central bank said. The measures of underlying inflation were broadly unchanged while “the changes in the prices of demand-sensitive products and more volatile items with greater sensitivity to cost changes such as food and energy had an upward effect on prices”, the NBH added.

“Households’ inflationary expectations have been broadly unchanged in recent months and remained at moderate levels, in line with underlying inflation developments,” the NBH said, reiterating statements issued in the previous months.

The NBH’s indicator for core inflation, excluding indirect tax effects, was 1.6 percent in January, unchanged from December. The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, was 1.5 percent in January, down from 1.6 percent in December.

Hungary industrial output down 0.5 pc in Dec, up 0.9 pc in FY 2016

Output of Hungary’s automotive sector, a key driver of industry in the country, fell by an annual 6.9 percent in December.

Output of the computer, electronics and optical equipment segment, another big part of Hungarian industry, climbed by 3.4 percent. Adjusted for the number of working days, industrial output climbed by 1.9 percent.

There was one less workday in December than in the same month a year earlier, but there was also a “workday Saturday” in the base period, a day on which many Hungarians take a day of vacation.

Republished with permission of Hungary Matters, MTI’s daily newsletter.