In November, output by the two main construction areas moved in opposite directions. Buildings construction fell by 14% in volume, while civil engineering works were up by 27.8% compared with November 2007. This increase – against an extremely low base in the previous year – is due to some large value road construction and utility works. As for construction output, in an eleven-month decline of 6.2%, buildings were down 9.7%, and civil engineering works decreased by 1.5%. In comparison with the previous month, buildings decreased by 1.8% and civil engineering works rose by 4.5%, according to indices adjusted for seasonality and working days.
Inflation Falling Back
Hungary's inflation rate dropped to the lowest in more than two years in December on tumbling commodity prices and reduced demand. The annual rate fell to 3.5 percent from 4.2 percent in November, the Budapest-based statistics office said in a statement today. It was the fifth straight month of decline and brought the inflation rate to the lowest since August 2006.
Inflation at the end of last year returned to within the central bank’s preferred range of 3 percent with a 1 percent divergence allowed on either side. The Budapest-based central bank expects the rate to fall to between 3.1 percent and 3.4 percent this year and to between 1.5 percent and 1.9 percent in 2010 from an estimated 6.2 percent last year.
The striking thing is that Hungary's seasonally adjusted core price index has now moved very little from mid summer 2008, which suggests to me that we may well soon be entering deflation territory.