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Tuesday, August 12, 2008

Hungary July Inflation Holds Staedy At 6.7%

Hungary's inflation rate remained unchanged in July at 6.7 percent as the rising forint - which has gained 11 percent against the euro over the past six months - kept a cap on the effect of energy price growth. The annual rate still at more than double the central bank's target. Consumer prices rose 0.1 percent from June. Core inflation, which strips out volatile food and energy costs, rose to 6 percent year on year and 0.4 percent in the month.

Food prices dropped 0.7 percent, falling for a second month, with an 11.4 percent decline in the cost of seasonal products such as potato, fruits and vegetables. Services gained 0.9 percent on the month, the biggest increase since January, mostly because of increases during the summer tourist season. The central bank is likely to find some comfort in the absence of second-round effects with the price of durable goods falling by 0.6 percent, the biggest decline since February 2007.

The forint, which reached a record of 227.99 forint per euro on July 18, was trading at 237.68 per euro at 12:02 p.m. this morning in Budapest, compared with 237.84 yesterday while the yield on the benchmark three-year bond rose to 8.61 percent from 8.52 percent.

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