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Hungary’s inflation rate soars to 15.6 pct in August

                BUDAPEST, Sep 9 (XINHUA/APP):Driven mostly by soaring food prices, Hungary’s annual inflation rate climbed from 13.7 percent in July to 15.6 percent in August, a level not seen since May 1998, the country’s Central Statistical Office (KSH) said here on Thursday.

                The figure was well over the official target of 3 percent set by the National Bank of Hungary (MNB) and was in line with analyst expectations.

                The highest year-on-year price hikes were registered for food and consumer durables, KSH said, adding that consumer prices increased by an average of 1.8 percent within a month.

                Despite the price caps on six basic food items set by the government in mid-January, food prices soared by 30.9 percent year-on-year in August.

                Last November, the government also capped fuel prices. This measure will stay in force until Oct. 1 this year. However, the government has recently restricted car owners’ eligibility for subsidized fuel in an attempt to ward off shortages.

                “There is reason to expect a further increase in inflation, since the Harmonized Index of Consumer Prices (HICP), which already includes the effects of the energy price increase, is already at 18.6 percent,” the local business journal Portfolio commented.

                According to Portfolio, inflation will probably break the psychological barrier of 20 percent in a few months, a level not seen since 1996.

                If the government cancels the price caps in October, inflation in Hungary might reach 22-24 percent, Portfolio added.

                The MNB expects this year’s annual inflation rate to remain between 11 percent and 12.6 percent, while analysts predict a rate of 13 percent.

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