Higher Oil Prices May Raise Consumer Price Index In Hungary

  • 22 Jun 2018 10:37 AM
  • Hungary Matters
Higher Oil Prices May Raise Consumer Price Index In Hungary
Inflation could rise slightly over the 3% mid-term target in the coming months on the back of sharp increases in global oil prices, but the National Bank of Hungary (NBH) said it expects no spillover effects in a quarterly report.

“Inflation expectations are well-anchored; thus the increase in oil prices is not expected to induce second-round spillover effects,” the central bank’s Monetary Council said in an executive summary prefacing the Inflation Report.

“After the temporary, inflationboosting effect of the oil price change has faded, from mid-2019 the rise in underlying inflation trends will ensure the sustainable achievement of the 3% inflation target,” the Council said.

The Council said the inflationary effect from the labour market “will remain moderate” as a further cut in the payroll tax counters the increase in labour costs.

It added that the correlation between domestic labour costs and consumer prices has weakened in recent years, in line with international experience.

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