The National Bank of Hungary (NBH) has published its monthly analysis of inflation developments on Tuesday, after the Central Statistical Office (KSH) released its April CPI readings (-0.1% yr/yr). The underlying inflation indicators also show further moderation in price pressure. In its brief analysis the central bank has also suggested that there is practically no price pressure in any segments of the economy.

In April 2014, the consumer price index stood at -0.1% and core inflation at 2.3%. Indirect tax-adjusted core inflation was 1.2% in the month. Consumer price inflation fell by 0.2 percentage points and core inflation by 0.4 percentage points relative to March. The moderation in the inflation rate in April was mainly accounted for by the decline in the annual index for fuel prices, apart from this, prices changes were generally moderate in other product groups as well.

The Bank’s measures of underlying inflation developments (demand-sensitive and sticky-price inflation) fell relative to the previous month. The levels of the measures continue to indicate a moderate inflation environment.

“Tradables” inflation was unchanged relative to the same period a year earlier. The price dynamics of non-durable tradables, adjusted for the effect of extremely volatile air fares, continued to be moderate in the month2. The prices of durable tradables, which tend to be highly volatile at the monthly frequency, after three months of price increases, fell in April and services prices edged down by 0.1% relative to the previous month.

Tradables inflation was unchanged relative to the same period a year earlier. The price dynamics of non-durable tradables, adjusted for the effect of extremely volatile air fares, continued to be moderate in the month2. The prices of durable tradables, which tend to be highly volatile at the monthly frequency, after three months of price increases, fell in April.

The most captivating part of it is that the contribution of core inflation excluding indirect taxes is 0.8% and the contribution of other items is -0.9%. The latter reflecst mostly the utility tariff cuts (-) and the hike to the tobacco profit margin (+) as one-off impacts. The 0.8% figure is extremely low even though we have no deflation there.

For more information: Inflation developments