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Thursday, November 01, 2007

Hungary Producer Prices September 2007

September saw another significant increase in domestic producer prices in Hungary, this time in the shape of a 0.4% hike in industrial producer prices in Hungary, accompanied by an even sharper 0.7% price hike in the processing industry, reproducing a tendency which first started to be noted last month. The figures give some support to assessments made by those analysts who have been warning about the danger of growing inflationary pressure in the domestic economy.

As we can see from the chart the danger exists that the disinflationary process may temporarily have ground to a halt. In the food industry, which accounts for a significant part of domestic sales, the sharp price hikes that started in August continued throughout September at a monthly rate of 1.7%, which was higher than the rate registered in any other processing industry sector in September.

Together with the September CPI statistics the PPI news seems to confirm the view that there is little to prevent the continuing producer price shock from making a direct and immediate impact on retail prices. This may indicate that inflationary expectations are rising rather than falling at this juncture.

On the other hand, the export PPI continues to show a strong deflationary tendency, which is, of course, very good news for Hungarian exports.

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